U.S. Stocks Drop After Hope Fades for Expanded Aid: Markets Wrap

(Bloomberg) -- U.S. stocks pulled back from record highs, with small-cap shares posting their biggest drop in a month, as prospects faded for bigger government aid checks to individuals. The dollar weakened.

The Russell 2000 Index tumbled almost 2%, while the S&P 500 finished only slightly lower. A gauge of global equities was set to close at a record after the U.S. House backed President Donald Trump’s proposal to boost aid checks for individuals, but pulled back from its high of the day as Senate Republicans blocked an attempt by Democrats to increase the direct payments to $2,000 from $600.

The year is coming to a close with risk assets such as stocks, corporate bonds and Bitcoin just off record highs. As investors try to gauge the impact of the pandemic and the pace of U.S. vaccine distribution, the S&P 500 is set to end the year 15% higher.

On the coronavirus front, more restrictions are being imposed to fight the spread of the new, more infectious strain. Covid-19 hospitalizations in the U.S. reached new highs, while Southern California plans to extend a regional stay-at-home order. South Korea’s daily toll of fatalities rose to a record, while Thailand reported its first virus death since November.

In Europe, the Stoxx 600 rose as the FTSE 100 Index rallied in the first session since the U.K.’s Christmas Eve trade deal with the European Union. Uncertainty about what accord will be struck on financial services weighed on Lloyds Banking Group Plc, NatWest Group Plc and Barclays Plc.

Elsewhere, the pound recouped some of Monday’s decline.

Here are some key events coming up:

• U.S. pending home sales and goods trade balance data are due Wednesday.
• U.S. initial jobless claims figures are published Thursday.
• Most global stock markets are closed Friday for New Year’s Day.

These are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.2% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index gained 0.8%.
• The MSCI Asia Pacific Index jumped 1.4%.
• The MSCI Emerging Market Index increased 1.1%.

Currencies

• The Bloomberg Dollar Spot Index sank 0.4%.
• The euro increased 0.3% to $1.2249.
• The British pound gained 0.4% to $1.3499.
• The Japanese yen strengthened 0.3% to 103.53 per dollar.

Bonds

• The yield on 10-year Treasuries rose one basis point to 0.93%.
• Germany’s 10-year yield dipped less than one basis point to -0.58%.
• Britain’s 10-year yield fell four basis points to 0.21%.

Commodities

• West Texas Intermediate crude gained 0.8% to $47.99 a barrel.
• Gold strengthened 0.3% to $1,879.61 an ounce.

©2020 Bloomberg L.P.