A week of drowsy trading got no lift from the latest prospect of more government spending.
President-Elect Joe Biden on Thursday evening unveiled a $1.9 trillion "American Rescue Plan" that includes a number of provisions, including $1,400 stimulus checks, supplemental unemployment benefits and a $15-per-hour federal minimum wage.
And yet, stocks went red on Friday.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Perhaps Wall Street had already baked in all of its expectations for the much-anticipated plan. Or perhaps the market remained distracted by COVID itself, which is still taking a hefty toll here in the U.S. as the vaccine rollout seems to crawl forward. Also of some concern was the start of the Q4 earnings season – mixed results from Citigroup (C, -6.9%) and Wells Fargo (WFC, -7.8%) weighed on those stocks and the rest of the financial sector.
The Dow Jones Industrial Average closed 0.6% lower to 30,814, and the rest of the major indices followed suit.
Other action in the stock market today:
- The S&P 500 took a 0.7% spill to 3,768.
- The Nasdaq Composite broke back below 13,000, dropping by 0.9% to 12,998.
- The Russell 2000 dropped hard off its all-time high, losing 1.5% to 2,123.
- Gold futures weren't exempt, dipping 1.3% to settle at $1,827.80 per ounce.
- U.S. crude oil futures finally cooled off, losing 2.4% to $52.31 per barrel.
- Bitcoin prices, at $39,633 on Thursday, plunged more than 10% to $35,579. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
- Tesla (TSLA, -2.2%) shares declined after receiving a Street-high $950 price target from Wedbush analyst Daniel Ives, but not a Buy recommendation.
Turbulence Ahead?
While optimistic about 2021 overall, many analysts predicted some bumpiness, especially in Q1, and we might be at the onset of one such rough patch.
"We have fairly high conviction in two things," says Canaccord Genuity equity strategist Tony Dwyer. "Conditions remain ripe for a temporary correction that should give back much of what has been gained since late last year, and when it comes, investors are likely to believe it is something more sinister than an overbought correction."
One thing that stood out clearly Friday was a flight to income-producing equities. Within the Dow itself, three of the five best performers were so-called "Dogs" – the industrial average's highest-yielding stocks as of the start of the year.
Business development companies (BDCs), a high-yielding but low-traffic area of the market, also outperformed.
And real estate, much maligned in 2020, earned some attention Friday. Real estate investment trusts (REITs) are well-known among income investors given their mandate to turn over at least 90% of their taxable profits via cash distributions to their shareholders. Many of them currently sport higher-than-normal yields after a difficult 2020, making them a one-two punch of income and rebound potential once the American economy settles back onto its track. Check them out.
Kyle Woodley was long Bitcoin as of this writing.
-
How to Navigate Your Medicare Advantage Plan in a DisasterIf you're a Medicare Advantage member in an area that has been impacted by a disaster, you might be worried about access to care and medicine. Here's what you need to know.
-
Older Investors: Boost Your Savings and Retire EarlierThis one measure can help older investors retire up to two years earlier and potentially double their retirement savings.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market TodayThe last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
-
What CEOs Say About President Trump and Fed Chair PowellTop opinion-shapers and decision-makers are expressing mixed views on the evolving conflict between the White House and the central bank.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
Dow Bleeds Red Due to Big Blue: Stock Market TodaySix of the official GICS sectors were in the green, led by communications services, technology and energy stocks.
-
How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
If You'd Put $1,000 Into Berkshire Hathaway Stock 20 Years Ago, Here's What You'd Have TodayBerkshire Hathaway is a long-time market beater, but the easy money in BRK.B has already been made.
-
Stock Market Today: Nasdaq Hits a New High as Nvidia SoarsA big day for Nvidia boosted the Nasdaq, but bank stocks created headwinds for the S&P 500.
