Pandemic Job Losses Hit US Equities

US stock markets closed mostly lower on Wednesday, as mounting US layoffs in the wake of new mandated lockdowns to contain surging Covid-19 infections dampened investor risk appetite.

The S&P 500 index and the Dow Jones Industrial Average retreated from record closing highs, pulled lower by cyclicals and small caps that drove the rally earlier in the week.

But pandemic-resilient tech and tech-adjacent market leaders helped keep the Nasdaq afloat.

"It's a growth day, flipping back the other way away from value," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. "It's this ongoing struggle between the virus and the vaccine."

"There's a reality setting in that while the vaccine will start being distributed fairly quickly, the virus isn't (going to) go away quickly and therefore the timeline for economic improvement is getting pushed out."

A wide range of data released in advance of Thursday's Thanksgiving holiday was dominated by a second consecutive week of unexpected jobless claims increases, suggesting that new restrictions to combat spiking coronavirus cases could hobble the struggling labor market's recovery.

"The economic data is not good, and we know it won't be good for some time given this new wave of the virus," Ghriskey added.

The market appeared to be replaying the previous two weeks, which began with rallies driven by promising vaccine news but pivoted back to stay-at-home plays on near-term pandemic realities and lack of new fiscal stimulus.

Still, the vaccine developments and removal of uncertainties surrounding the US presidential election have driven Wall Street indexes to record closing highs, and put the S&P 500 on course for its best November ever.

Market participants believe US stocks have more room to climb. A recent Reuters poll showed analysts believe the S&P 500 will gain 9 percent between now and the end of 2021. The index has surged about 66 percent since the coronavirus-led crash in March and is up about 12 percent so far this year.

The Dow Jones Industrial Average fell 0.6 percent to 29,872, the S&P 500 lost 0.2 percent to 3,629 and the Nasdaq Composite added 57.08 points, or 0.5 percent to 12,094. (Reuters)