US close: Stocks mixed amid Georgia vote, Washington violence
Stocks on Wall Street finished on a mixed note on Wednesday, as the Democrats looked set to win both seats in Georgia’s run-off election to the Senate, while violence on Capitol Hill saw the official count of the Electoral College vote suspended.
At the close, the Dow Jones Industrial Average was up 1.44% at 30,829.40 and the S&P 500 added 0.57%, while the Nasdaq Composite was 0.61% weaker at 12,740.79.
The Dow closed 437.8 points higher on Wednesday, extending gains recorded in the previous session.
Senators began the official counting and certifying of the Electoral College vote earlier on Thursday - a largely ceremonial process to confirm Joe Biden as the winner of November’s presidential election.
A large number of pro-Donald Trump protestors gathered outside the Capitol turned violent, however, breaking through security barricades and storming the building which contains both houses of Congress.
Senators, Representatives and staff were locked down and subsequently evacuated as an armed standoff between a rioter and police took place at the doors to the House chamber.
Other rioters made it onto the Senate floor, while images also showed a pro-Trump protestor inside House Speaker Nancy Pelosi’s office.
The primary focus before the violence broke out in Washington was the Senate run-off race in Georgia, with the Democrats needing to win both seats to take the balance of power from the Republicans.
Late in the session, a number of media outlets had called winners for both seats for the Democrats, with Raphael Warnock and Jon Ossoff beating Kelly Loeffler and David Perdue, respectively.
Those two wins give each party 50 seats in the Senate, meaning vice president-elect Kamala Harris would have a tie-breaking vote, giving the Democrats control of the Senate and making it far easier for Joe Biden to enact his policies.
While many traders fear that a Democrat-run Senate will lead to increased corporate taxes and tighter regulations on firms, the outcome was also seen as potentially speeding up the passing of further Covid-19 stimulus, potentially boosting to companies hit the hardest by the pandemic.
“Everything has changed in Washington after the Democrats won the Georgia Senate runoff elections, except the need to find 60 votes for fiscal measures which can't be passed via reconciliation,” said Pantheon Macroeconomics chief economist Ian Shepherdson.
To use reconciliation, the Byrd Rule says that budget measures must not increase the deficit after the 10-year-window over which all tax and spending changes are costed, Shepherdson explained.
“The rule means that any attempt to pass President-elect Biden's ‘Build Back Better’ plan in its entirety is doomed to fail, because the spending measures - on green energy, education, infrastructure, and elsewhere - totalling more than $5trn over 10 years, are offset only partly by the proposed tax increases, totalling $2.8trn, according to the Tax Foundation.
“No Republican will vote for the tax increases.”
The minutes from the December Federal Reserve meeting were also released during the day, with most members agreeing not to expand the central bank’s purchasing of long-term bonds.
Still, the Fed adopted new guidance on its asset purchase programme, saying increases would continue “until substantial further progress has been made toward reaching the committee’s maximum employment and price stability goals”.
Berenburg’s Roiana Reid said the Fed’s large-scale asset purchases (LSAPs) had resulted in a “massive” $2.8trn increase in its balance sheet since mid-March, as it continued to purchase $120bn in securities per month, being $80bn per month in Treasury securities and $40b per month in mortgage-backed securities.
“Although the Fed has not provided any quantitative thresholds for this enhanced LSAP forward guidance, we expect the Fed to continue purchases at this current pace in the medium-term and consider tapering purchases only after real GDP has regained its pre-pandemic level,” Reid said.
“The minutes indicated that the tapering of its asset purchases would follow a sequence similar to the one implemented in 2013 and 2014.”
On the macro front, private sector employment in the US unexpectedly fell in December as the Covid-19 crisis took its toll on the leisure and hospitality sector, according to the latest figures from ADP.
Employment declined by 123,000 from November, versus expectations for an 88,000 increase and marking the first drop since April.
The November total of jobs added, meanwhile, was revised to 304,000 from 307,000.
Elsewhere, IHS Markit's final composite PMI for December revealed economic activity in the US service sector expanded at a softer pace last month than it had in November, hitting its lowest level in three months at 55.3, down from 58.6.
That was still above the 50-point mark that separates expansion from contraction, however.
Lastly, new orders for manufactured goods in the US rose by $5.0bn, or 1%, to $487.2bn in November, according to the Census Bureau, followed October's increase of 1.3% and better than market expectations for growth of 0.7%.
In equities, banks were among the leading gainers, with Bank of America up 6.25% and JPMorgan & Chase 4.7% firmer.
Biopharmaceutical manufacturer Moderna was ahead 6.48% after the European Medicines Agency recommended the European Commission authorise the company’s Covid-19 vaccine.
On the downside, the major technology plays dragged the Nasdaq into the red, with Alphabet off 0.32%, Amazon down 2.49%, Apple behind by 3.32%, Facebook 2.83% weaker and Netflix falling 3.9%.
There were no major corporate earnings releases on Wednesday.
Dow Jones - Risers
Caterpillar Inc. (CAT) $193.86 5.57%
Goldman Sachs Group Inc. (GS) $285.57 5.40%
JP Morgan Chase & Co. (JPM) $131.55 4.70%
Walgreens Boots Alliance, Inc. (WBA) $43.03 4.54%
Unitedhealth Group Inc. (UNH) $358.97 4.20%
American Express Co. (AXP) $123.06 3.70%
Travelers Company Inc. (TRV) $139.10 3.40%
Chevron Corp. (CVX) $89.80 3.22%
Exxon Mobil Corp. (XOM) $44.61 2.55%
International Business Machines Corporation (CDI) (IBM) $129.29 2.50%
Dow Jones - Fallers
Apple Inc. (AAPL) $126.60 -3.37%
Coca-Cola Co. (KO) $50.49 -3.18%
Microsoft Corp. (MSFT) $212.25 -2.59%
Visa Inc. (V) $212.62 -0.88%
Pfizer Inc. (PFE) $36.92 -0.86%
Boeing Co. (BA) $211.03 -0.28%
McDonald's Corp. (MCD) $211.00 -0.23%
Dowdupont Inc. (DWDP) $30.52 0.00%
Walt Disney Co. (DIS) $179.12 0.38%
Home Depot Inc. (HD) $267.57 0.57%
S&P 500 - Risers
Zions Bancorporation (ZION) $48.51 11.24%
Centene Corp. (CNC) $67.66 10.79%
Macy's Inc. (M) $12.51 9.83%
Huntington Bancshares Inc. (HBAN) $14.10 9.81%
Keycorp (KEY) $18.16 9.73%
Fifth Third Bancorp (FITB) $30.26 9.60%
Discovery Inc. Class C (DISCK) $29.50 9.18%
Alliance Data Systems Corp. (ADS) $78.90 9.13%
Vulcan Materials Co. (VMC) $160.76 8.94%
United Rentals Inc. (URI) $256.55 8.91%
S&P 500 - Fallers
Nvidia Corp. (NVDA) $504.58 -5.90%
Alexandria Real Estate Equities Inc. (ARE) $163.25 -4.30%
Equifax Inc. (EFX) $182.40 -4.17%
Cadence Design Systems Inc. (CDNS) $130.64 -4.04%
Adobe Systems Inc. (ADBE) $466.31 -3.99%
Netflix Inc. (NFLX) $500.49 -3.90%
Akamai Technologies Inc. (AKAM) $101.53 -3.69%
Synopsys Inc. (SNPS) $249.70 -3.55%
Paypal Holdings Inc (PYPL) $226.83 -3.44%
VeriSign Inc. (VRSN) $199.51 -3.38%
Nasdaq 100 - Risers
J.B. Hunt Transport Services Inc. (JBHT) $147.29 6.68%
Dollar Tree Inc (DLTR) $112.97 5.45%
DENTSPLY Sirona Inc. (XRAY) $57.96 4.83%
Expedia Group Inc. (EXPE) $143.42 4.58%
Walgreens Boots Alliance, Inc. (WBA) $43.03 4.54%
Sirius XM Holdings Inc (SIRI) $6.52 4.49%
Ross Stores Inc. (ROST) $122.29 4.37%
PACCAR Inc. (PCAR) $88.81 3.93%
Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) $291.19 3.86%
Gilead Sciences Inc. (GILD) $61.95 3.25%
Nasdaq 100 - Fallers
JD.com, Inc. (JD) $88.18 -7.66%
Nvidia Corp. (NVDA) $504.58 -5.90%
Mercadolibre Inc. (MELI) $1,571.98 -4.73%
Baidu Inc. (BIDU) $203.97 -4.69%
Cadence Design Systems Inc. (CDNS) $130.64 -4.04%
Adobe Systems Inc. (ADBE) $466.31 -3.99%
Netflix Inc. (NFLX) $500.49 -3.90%
Synopsys Inc. (SNPS) $249.70 -3.55%
Paypal Holdings Inc (PYPL) $226.83 -3.44%
Apple Inc. (AAPL) $126.60 -3.37%