Commenting on Biden’s COVID relief proposal meeting expectations and today’s trading, Gorilla Trades strategist Ken Berman said:
Biden's $1.9 Trillion COVID Relief Proposal
The major indices are all trading lower at midday as the combination of a batch of weak economic numbers, mixed earnings, and negative COVID headlines triggered a pullback in the leading sectors of the market. Pfizer (PFE, -0.7%) admitted that it will temporarily delay its vaccine shipments to Europe, which delivered another blow to the already weak equities, and, in turn, global risk assets. Although President-elect Joe Biden’s highly-anticipated $1.9 trillion COVID relief proposal met expectations, that wasn’t enough to prop up U.S. stocks and we saw a notable pullback in the stimulus-fueled sectors and small-caps.
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The earnings season “officially” kicked off today with a mixed bag of banking earnings, but despite JP Morgan’s (JPM, -2.5%) promising numbers, Wells Fargo’s (WFC, -7.6%) and Citigroup’s (C, -4.5%) weak revenues weighed heavily on their stocks and the sector. In economic news, retail sales missed expectations badly for the second month in a row, due to a dip in online sales, and last month's readings were revised downwards as well. The Empire State Manufacturing Index, the Michigan consumer sentiment number, and the Producer Price Index (PPI) were also below the consensus estimates, while, on a positive note, industrial production beat expectations in December.
Dow: 30,847, - 144 or 0.5%
S&P 500: 3,777 - 19 or 0.5%
Nasdaq: 13,049, - 63 or 0.5%
Russell 2000: 2,110, - 44 or 2.1%
Market breadth has been relatively weak this morning, with decliners outnumbering advancing issues by a more than 5-to-1 ratio on the NYSE at midday. Only 1 stock hit a new 52-week low on the NYSE and the Nasdaq, while 139 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. Energy stocks, materials, financials, and industrials have all been underperforming this morning amid the global risk-off shift, while the key defensive sectors and real estate stocks held up well as Treasury yields plunged. Stay tuned!