Stocks and index ETF are sliding on Wednesday, as investors digest the continuing legislative stalemate over additional fiscal stimulus.
After climbing over 100 points earlier in the day, the Dow Jones Industrial Average slipped 0.48%, as the S&P 500 dropped 0.81%. The Nasdaq Composite tumbled by 1.77%, weighted down by underperforming tech stocks like Amazon.
Apple was one of the the worst-performing Dow components, falling 1.4%, along with Microsoft, which dropped a similar amount. The iShares Global Tech ETF (IXN), dropped more than 1% as well.
Major stock ETFs are also losing traction on Wednesday amid the stimulus stalemate. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are all declining just before 2PM EST.
Stimulus Discussions Drag On
Index ETFs and stocks tumbled after Senate Majority Leader Mitch McConnell told Politico that Republicans and Democrats were “still looking for a way forward” on additional fiscal aid, dampening investor hopes for a quick resolution to the rapidly worsening coronavirus pandemic.
Just Tuesday, Treasury Secretary Steven Mnuchin had suggested a $916 billion stimulus package to House Speaker Nancy Pelosi, which had generated more optimism in markets.
“The US fiscal stimulus process has turned somewhat acrimonious, but Congress has another 1.5 weeks to try and reach a compromise (as the budget deadline is about to get pushed” to Dec. 18),” said Adam Crisafulli of Vital Knowledge.
Currently, over 200,000 Americans are testing positive for Covid-19 every day on average, according to an analysis of Johns Hopkins University data by CNBC. The United States has witnessed a staggering 1 million fresh cases in half a week, bringing the country’s tally to more than 15 million.
Despite the rapid spread of the infection, investor concerns about the latest surge in coronavirus cases have been mitigated by Pfizer’s U.K. vaccine rollout, which began on Tuesday.
The vaccine rollout resulted in a surge in the Dow, S&P 500, and Nasdaq on Tuesday, leading to new highs in two of the indices. Analysts also attributed this spike to the holiday effect.
“Covid is raging and still no stimulus package? Never mind, with vaccinations already underway, it may be impossible to keep this stock market from rising through the holidays,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.
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