U.S. Stocks Pare Weekly Gain; Dollar Advances: Markets Wrap

(Bloomberg) -- U.S. stocks slipped from records as investors grew anxious that the virus will hamper growth for longer than expected and Democrats may struggle to get a nearly $2 trillion spending bill through Congress.

The S&P 500 Index fell for the first time in four days, with losses widening on reports that the new virus strain may be deadlier. It rose 1.9% in the week. Oil’s slump dragged energy companies lower, while Intel Corp. dropped after its new boss recommitted to chipmaking, a move opposed by some investors. Yields on Treasuries edged lower, and crude oil slid below $53 a barrel. Bloomberg’s dollar index rose for the first time in five sessions.

Overseas markets struggled after economic data in Europe missed estimates. IHS Markit data showing a pickup in U.S. manufacturing did little to boost sentiment. Senate Republicans continued to come out against Joe Biden’s aid package, threatening the legislation’s passage in the sharply divided body.

“The virus numbers are not good right now obviously around the world, especially in the U.S. and in Europe, and we’re also getting a little bit more question about how much of the stimulus is actually feasible and what’s the timeline,” Scott Ladner, chief investment officer at Horizon Investments, said by phone. “Those two things are putting just a damper on the enthusiasm that has existed since November.”

The week’s global equity rally, spurred by expectations of economic support and the rollout of vaccines, paused as traders weigh still-troubling Covid-19 trends. Biden, who is pushing for $1.9 trillion in additional spending, unveiled a strategy to combat the virus while warning the pandemic will worsen before it improves. Restrictions intensified from Germany and the U.K. to Hong Hong, and the European Central Bank cautioned that the euro area is headed for a double-dip recession. The U.K.’s new more contagious strain of coronavirus may be linked to higher mortality, Prime Minister Boris Johnson has said.

“Recent news flow on the pandemic has not been favorable,” said Jean-Francois Paren, global head of market research at Credit Agricole. “After the post-election wave of optimism from the U.S., markets have been left facing the reality of vaccine delivery and new lockdown measures, and the perspective of a double-dip in Europe.”

The Stoxx Europe 600 index fell for the second straight week as a gauge of private-sector activity in the euro region fell deeper into contraction and Germany cut its forecast for economic growth. The British pound weakened after Johnson said the U.K.’s third lockdown could last into the summer. Italian stocks underperformed and bond yields rose after reports Prime Minister Giuseppe Conte is considering early elections.

Elsewhere, Bitcoin rebounded to trade around $32,000 after earlier tumbling below $30,000.

These are the main moves in markets:

Stocks

• The S&P 500 lost 0.3% by 4 p.m. New York time.
• The Stoxx Europe 600 Index fell 0.6%.
• The MSCI Asia Pacific Index dropped 0.7%.
• The MSCI Emerging Markets Index slipped 1.1%.

Currencies

• The Bloomberg Dollar Spot Index climbed 0.4%.
• The yen was at 103.78 per dollar, dipping 0.3%.
• The euro rose 0.1% to $1.2178.
• The British pound weakened 0.5% to $1.3664.

Bonds

• The yield on 10-year Treasuries fell two basis points to 1.08%.
• Germany’s 10-year yield dipped one basis point to -0.51%.
• The U.K.’s 10-year yield fell one basis point to 0.32%.

Commodities

• West Texas Intermediate crude fell 1.4% to $52.41 a barrel.
• Gold dropped 0.9% to $1,852.94 an ounce.

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