Political Worries Weigh On Wall Street

Wall Street's main indexes closed lower on Monday as investors took some profits after last weeks' records while they waited for earnings season to begin and eyed events in Washington with trepidation.

US stocks had rallied last week as investors bet that Democrats' win of Georgia runoff elections would bring a higher likelihood of a heftier fiscal stimulus package to boost the pandemic-savaged economy.

But some investors worried stimulus could be delayed as House Democrats introduced a resolution to impeach US President Donald Trump, accusing him of inciting insurrection following a violent attack on the Capitol by his supporters.

"When markets are looking at something as critical as the governance of the United States, even a little bit of uncertainty can have a meaningful impact," said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts. "What does that do to the ability of the parties to work together to pass policy things like stimulus."

But US Treasury yields rose as safe haven bonds sold off on Monday and economically-sensitive sectors such as energy and financials outperformed while defensive bond proxy sectors like utilities and real estate sold off.

These trades suggested to Keith Lerner, chief market strategist at Truist Advisory Services in Atlanta, Georgia, that investors were still hopeful about stimulus.

"After last week the market is in a little bit of a digestion phase. Underneath the surface what you're seeing continue is the reflation trade," said Lerner. "This is a continuation of the expectation of more fiscal stimulus."

And along with wariness about Trump's last nine days in office, Lerner cited uncertainty ahead of the unofficial start of earnings season on Friday when banks such as JP Morgan report results.

The Dow Jones Industrial Average fell 0.29 percent, to 31,009, the S&P 500 lost 0.66 percent, to 3,800 and the Nasdaq Composite dropped 1.25 percent, to 13,036.

Among the S&P's 11 major industry indexes, consumer discretionary and communications services were the biggest percentage decliners.

Shares of Twitter tumbled 6.4 percent and weighed on the communications sector after the micro-blogging site permanently suspended Trump's account.

Other Big Tech firms Facebook, Google parent Alphabet and Apple were also weak on Monday as they took their strongest actions yet against Trump to limit his social media reach. (Reuters)