Stocks drift mostly lower a day after setting more records

NEW YORK (AP) — Stocks are off to a weak start on Wall Street as investors keep a cautious eye on Washington, where lawmakers appear to be getting close to an agreement on supplying more badly needed aid for the economy. The S&P 500 was down 0.1% in the first few minutes of trading Wednesday. The mixed trading comes a day after a broad rally that pushed the Nasdaq and an index of small-company stocks to record highs. Treasury yields rose in a sign that investors were becoming a bit more optimistic about the economy. European markets mostly rose and Asian markets ended higher.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

World markets advanced on Wednesday after revived hopes for more aid for the U.S. economy broke a four-day losing streak on Wall Street.

Benchmarks were higher in most major markets but unchanged in Shanghai. U.S. futures also climbed higher.

Overnight, the S&P 500 gained 1.3% as investors grew hopeful that Washington can surmount its partisan divide to deliver more aid to the struggling economy. Technology companies powered much of the rally, which helped push the tech-heavy Nasdaq composite to an all-time high. An index of small-company stocks also set a record high.

Optimism over the economic outlook is rising as approval for a second COVID-19 vaccine may be imminent.

Investors also have been encouraged by signs that the European Union and United Kingdom may finally broker a trade deal following the UK’s departure from the bloc.

The brightening in sentiment comes even as rising rates of coronavirus infections lead governments in Europe and elsewhere to raise their alert levels and tighten pandemic-fighting restrictions.

Britain’s FTSE surged 1.3% to 6,595.07, while Germany’s DAX added 1.2% to 13,527.20. In Paris, the CAC 40 surged 0.9% to 5,581.40. The future for the S&P 500 gained 0.2% and the future for the Dow industrials was up 0.2%.

In Asian trading, Japan’s Nikkei 225 index gained 0.3% to 26,757.40 despite the release of data showing exports fell 4% in November, while imports dropped 11% from a year earlier. Exports of vehicles, semiconductors and other manufactured items showed the biggest declines.

However, a monthly survey of manufacturers showed conditions improving, with the purchasing managers index at preliminary reading of 49.7 on a scale up to 100 where 50 markets the cut off for expansion. It was a 20-month high for the purchasing managers index of au Jibun Bank. The PMI was at 49.0 in November.

Hong Kong’s Hang Seng surged 1% to 26,460.29 and the Kospi in South Korea rose 0.5% to 2,771.79.

Australia’s S&P/ASX 200 advanced 0.7% to 6,679.20 and the Shanghai Composite index was virtually unchanged, at 3,366.98.

In the U.S., negotiations between Democrats and Republicans on another round of coronavirus relief have been dragging on for weeks. Fresh signs of cooperation Tuesday appeared to boost the market’s confidence that Washington can get past its partisan divide and hammer out a deal.

A bipartisan group of lawmakers unveiled a detailed proposal on Tuesday, as meanwhile House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin held another round of talks.

A vaccine candidate developed by Moderna and the National Institutes of Health may be on the cusp of regulatory approval after the Food and Drug Administration said its preliminary analysis confirmed its safety and effectiveness. It would join the nation’s first vaccine, which just began rolling out. Hundreds of hospital and health care facilities will get their first shipments Tuesday of the vaccine developed by Pfizer and BioNTech.

The S&P 500 rose 47.13 points to 3,694.62. The Dow Jones Industrial Average gained 1.1% to 30,199.31. The tech-heavy Nasdaq climbed 1.3%, to 12,595.06.

Small-company stocks did especially well, a sign that investors are feeling more optimistic about prospects for the economy. The Russell 2000 index picked up 2.4%, to 1,959.76, a record high.

Another round of financial support from Washington could help carry the economy through what’s expected to be a bleak winter, before vaccines help things get closer to normal next year.

“It does feel like we’re getting closer, albeit to a leaner package that addresses the near-term threats facing the country. But that’s better than the alternative of moving into 2021 without any support measures in place,” Craig Erlam of Oanda said in a commentary.

The number of U.S. workers applying for unemployment benefits is back on the rise, as governments around the country and world bring back varying degrees of restrictions on businesses. Even without lockdown orders, the fear is that the rising number of deaths will keep customers away from businesses.

Still, the S&P 500 remains near its record set a week ago. Massive efforts by the Federal Reserve have provided another huge underpinning, and the central bank began its last policy meeting of the year on Tuesday. It will announce its decision on Wednesday after already cutting short-term interest rates to nearly zero and indicating it will keep them there for a while even if inflation rises above its target of 2%.

The yield on the 10-year Treasury was steady at 0.92%.

In other trading, benchmark U.S. crude oil gained 7 cents to 47.69 per barrel in electronic trading on the New York Mercantile Exchange. It rose 63 cents on Tuesday to $47.62. Brent crude, the international standard, picked up 6 cents to $50.83 per barrel.

The U.S. dollar slipped to 103.37 Japanese yen from 103.68 yen late Tuesday. The euro rose to $1.2197 from $1.2155.


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