Nasdaq turns negative Wednesday as yields climb in 2021’s final days, but Dow hovers in record territory

U.S. stocks lost altitude mid-morning Wednesday, with the Nasdaq Composite Index turning negative as Treasury yields climbed toward one-month highs. However, the Dow industrials were holding on to a small gain after punching into record-close territory near the session’s opening trade. The omicron variant of COVID continues to serve as a focus for investors, but the new strain has yet to significantly impede the market’s recent uptrend, even as the World Health Organization on Wednesday reported that the number of COVID-19 cases recorded world-wide increased by 11% last week compared with the previous week, led by the Americas. 

Sign up for our Market Watch Newsletters here.How are stock indexes trading?
The Dow Jones Industrial Average
DJIA,
+0.21%
was trading 74 points, or 0.2%, higher at 36,472, climbing above its Nov. 8 record close at 36,432.22.

The S&P 500 index
SPX,
+0.11%
was trading less than a point, or 0.1%, lower at 4,784.

The Nasdaq Composite Index
COMP,
-0.18%
was trading 75 points, or 0.5%, lower at 15,706, after hitting an intraday high at 15,821.81.

On Tuesday, the Dow rose 95.83 points, or 0.3%, to end at 36,398.21, its second-highest close ever, marking a fifth straight advance for the blue-chip index. The S&P 500 slipped 4.84 points, or 0.1%, to close at 4,786.35, a day after closing at a record. The Nasdaq Composite fell 89.54 points, or 0.6%, to finish at 15,781.72. Check out: Need to Know: This fund driven by artificial intelligence is ditching big tech. Here’s what it’s doing instead. Sign up for the newsletter here. What’s driving the market? U.S. stock benchmarks lost some ground Wednesday, but the Dow retained its grip on record-close territory, as investors struggle to find fresh incentives to push the rally substantially higher in the final days of 2021, with investors having mostly shaken off fears about COVID-19. The interest-rate sensitive Nasdaq Composite turned south early in Wednesday’s trade as the yield for the 10-year Treasury rose to its highest level in about a month at 1.52%. Wall Street is wagering that the economic recovery that took hold at the start of the year and strong earnings from U.S. corporations will continue to underpin buying into 2022, at least for the first few months. Rising case counts of COVID are being overshadowed, at this point, by preliminary research that suggests that the omicron variant of COVID results in mild symptoms and is pushing up hospitalization rates only slowly. “In any case, yesterday’s pullback is far from pointing to a trend reversal,” wrote Charalambos Pissouros, head of research at JFD Group, in a daily research note. “With media suggesting that the fast spreading of the omicron COVID variant is unlikely to lead to global lockdowns again, due to its milder symptoms, investors may decide to reignite the so-called ‘Santa Rally’ for the remaining of the week,” the analyst wrote, referring to the seasonal uptrend that starts in the final five sessions of the year and the first two of the following year. Read: Santa Claus rally is off to best start in 20 years. Here’s what history says about the stock market’s performance when rally starts this well. In U.S. economic data, the trade deficit in goods surged by 17.5% in November to set an all-time high, keeping the U.S. on track in 2021 to post its biggest annual shortfall on record. An early or advanced look at the trade gap in goods showed that it increased to $97.8 billion in November from a revised $83.2 billion in October, according to the U.S. Census Bureau. The U.S. is poised to surpass a record set in 2006 and incur its biggest international trade deficit ever. Separately, the number of home buyers who signed a contract to purchase a home in November declined, as high home prices give buyers pause. Pending home sales decreased 2.2% in November compared with October, the National Association of Realtors reported Wednesday. Which companies are in focus?
Shares of Tesla TSLA were up 0.3% after CEO Elon Musk sold another $1 billion of stock in the electric-vehicle maker, according to Securities and Exchange Commission filings, to pay the taxes for the exercise of a 1.55 million share option.

Shares of Apple Inc.
AAPL,
+0.30%
were up 0.5% after reports that the iPhone maker is paying up to $180,000 to prevent employees from moving to tech rivals including Meta Platforms FB, according to Bloomberg News.

How are other assets faring?
The yield on the 10-year Treasury note TMUBMUSD10Y was up 1.52%, up by about 4 basis points. Yields for debt rise as prices falls.

The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up less than 0.1%.

Oil futures fell, with the U.S. benchmark CL00 for February delivery CLG22 trading 0.7% lower to $75.45 a barrel. Gold futures GC00 for February delivery GCG22 declined 0.8% to $1,796.10 an ounce, falling beneath $1,800.

Bitcoin BTCUSD was holding around $47,746, after a downturn on Tuesday.

The Stoxx Europe 600 index SXXP was virtually unchanged, while London markets were up 0.8% in their first trading after the Christmas holidays.

In Asian trade, the Shanghai Composite SHCOMP ended 0.9% lower, while the Hang Seng Index HSI fell up 0.8%. Japan’s Nikkei 225 NIK closed 0.6% lower and China’s CSI 300 000300 booked a 1.5% decline.

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