Home » Business » New York Stock Exchange, Biden’s stimulus package also sluggish consumption indicators… Dow closes down 0.57%

New York Stock Exchange, Biden’s stimulus package also sluggish consumption indicators… Dow closes down 0.57%

(New York = Yonhap News) Correspondent Oh Jin-woo, United Infomax Correspondent = In the New York Stock Exchange, the leading index fell even though the next US President Joe Biden released stimulus measures. This is due to the fact that expectations for stimulus measures were significantly reflected and economic indicators such as retail sales were sluggish.

On the 15th (hereafter Eastern time), the Dow Jones 30 Industrial Average on the New York Stock Exchange (NYSE) closed at 30,814.26, down 177.26 points (0.57%) from the battlefield.

The Standard & Poor’s (S&P) 500 index closed at 3,768.25, down 27.29 points (0.72%) from the battlefield, and the technology stock-oriented NASDAQ index closed at 12,998.50, down 114.14 points (0.87%).

The Dow index fell about 0.9% this week. The S&P500 and NASDAQ fell by 1.5% each.

The market watched Biden’s stimulus measures, key indicators such as retail sales, and the spread of the novel coronavirus infection (Corona 19).

Biden-elect presented a $1.9 trillion stimulus package the previous day. It included additional cash payments to Americans, expanded unemployment benefits and extended periods.

Biden-elect also announced plans to announce another fiscal stimulus plan in February that focuses on infrastructure investment and climate change response.

A large-scale stimulus package was announced, but the reaction from the stock market was bleak.

It has been evaluated that the stimulus expectations have already been significantly reflected in the price. The so-called’buying on rumors and selling on news’ patterns of transactions appeared.

In a situation where the confrontation between Democrats and Republicans is sharpened by the impeachment of President Donald Trump, questions are raised as to whether stimulus measures can be agreed smoothly.

Some point out that the larger-than-expected stimulus package has stimulated concerns over possible tax increases. It is expected that various tax hikes, including corporate tax, will inevitably be promoted for financing. The Democratic Party had raised the need for tax increases even before the presidential election.

The sluggish US consumption indicators also weighed on investment sentiment.

The Ministry of Commerce announced that December retail sales fell 0.7% from the previous month. It was much less than the 0.1% decline in the market forecast compiled by The Wall Street Journal. It was found that the effect of the re-proliferation of Corona 19 is visible, such as a sharp decline in restaurant sales.

In addition, the preliminary value of the Michigan Consumer Attitude Index for January was 79.2, falling from the previous month’s final value of 80.7. Consumer sentiment indicators were also sluggish, falling below the market forecast of 79.4.

Consumption is the key to supporting the U.S. economy, so concerns about the economic recession in winter have grown even more.

The spread of Corona 19 also added anxiety.

The UK has virtually blocked travel by mandating corona 19 pre-screening and quarantine for a certain period of time for all entrants. Anticipation is steadily coming out that Germany and France will also strengthen the blockade.

In particular, in China, the initial epicenter of the pandemic, the number of patients again increased and the tightening of containment measures made the market more unstable.

In addition, concerns over the spread of the vaccine emerged, including announcing that Pfizer will reduce the amount of vaccine it provides to Europe for the time being.

The mixed performance of major banks did not provide power to the stock market.

JPMorgan Chase recorded 4Q net profit and sales that exceeded market expectations, but Citigroup and Wells Fargo’s sales were sluggish.

Citigroup shares plunged more than 6.9% on the day, and Wells Fargo fell 7.8%. The share price of JPMorgan also fell 1.8%, and was also sluggish.

Financial stocks fell 1.8% by industry on the day, and energy plunged more than 4%. Technology shares also fell by about 1%.

Other economic indicators released on that day were mixed.

The Federal Reserve Bank of New York announced that the Empire State index in January fell to 3.5 from 4.9 last month. It fell short of the market forecast of 6.0.

On the other hand, the Federal Reserve System (Fed and Fed) announced in December last year that industrial production increased 1.6% (seasonal adjustment) from the previous month. It far exceeded the experts’ estimate of 0.5%.

The Ministry of Labor announced that in December, the producer price index (PPI) rose 0.3% from the previous month. It fell short of the market estimate of 0.4%.

The Ministry of Commerce said that in November last year, corporate inventory rose 0.5% from the previous year to $1,959.9 billion. It was the same as the market forecast of 0.5% increase.

New York stock market experts have also begun to mention the risk that the Biden government’s stimulus package could end up in taxation.

BK Asset Management’s director Boris Schlossberg said, “The price response of the market (for stimulus packages) seems to be a so-called’sell on the news’ movement,” and “the expectation for stimulus measures led to a strong rally in risky assets.”

James Knightley, ING’s chief global economist, said, “Biden suggested that bridging the tax loophole would help government fiscal recovery, but at some point corporate and income taxes, capital Income tax increase will be inevitable.”

On the Chicago Options Exchange (CBOE), the volatility index (VIX) recorded 24.34, up 4.69% from the previous trading day.

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