Dow drops 200 points as traders mull Biden's stimulus plan and soft retail-sales data
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- US stocks sank on Friday as investors digested President-elect Joe Biden's stimulus plan and a December slump in retail sales.
- Biden rolled out a $1.9 trillion relief proposal on Thursday that includes $1,400 direct payments, state and local government aid, and expanded unemployment benefits.
- While Democrats' soft Senate majority increases the odds of a deal being passed, Republican opposition could strip the bill of some elements or push for higher taxes to offset its cost.
- Retail sales shrank 0.7% in December as COVID-19 lockdowns cut into holiday-season spending, according to Census Bureau data published Friday. Economists expected sales to hold flat from November.
- Watch major indexes update live here.
US equities fell on Friday amid a drop in retail sales and concerns that President-elect Joe Biden's stimulus proposal could lift taxes.
Biden unveiled a $1.9 trillion fiscal relief plan on Thursday that includes $1,400 direct payments, expanded federal unemployment benefits, and state and local government aid. Democrats' victories in Georgia runoff elections greatly improve the party's chances at passing such a sweeping stimulus measure.
Yet GOP opposition could strip the bill of some components before its passage. Lawmakers could also call for higher taxes to justify the legislation's hefty price tag, a move that would surely rankle investors hoping for President Donald Trump's low tax rates to remain in place.
Here's where US indexes stood shortly after the 9:30 a.m. ET open on Friday:
- S&P 500: 3,782.16, down 0.4%
- Dow Jones industrial average: 30,803.32, down 0.6% (188 points)
- Nasdaq composite: 13,127.45, up 0.1%
"The very health of our nation is at stake," Biden said in a speech revealing the plan, adding that failure to pass a large-scale relief package "will cost us dearly."
Stocks extended losses after retail sales data showed a third-straight monthly decline to close out last year. Spending at US retailers contracted 0.7% in December as COVID-19 restrictions offset holiday-season sales, according to Census Bureau data published Friday. Economists surveyed by Bloomberg expected sales to stay flat from the month prior.
November's reading was revised lower to a 1.4% contraction, suggesting surging coronavirus cases and lockdown measures swiftly cut into a V-shaped rebound in consumer spending.
"This likely is the nadir for retail sales, as the late-December stimulus and the pending stimulus under the Biden administration will boost both bank accounts and consumers' spirits," Robert Frick, corporate economist at Navy Federal Credit Union, said.
Fourth-quarter earnings kicked off with JPMorgan beating revenue and profit expectations. The bank reported a 42% jump in net income, bolstered by the release of $2.9 billion in loan-loss reserves.
Citigroup reported less-than-stellar results Friday morning. While the bank's revenue landed above estimates, weaker-than-expected performance in its fixed-income division contributed to a miss on quarterly earnings. The business reported revenue of $3.09 billion over the period, below the consensus expectation of $3.2 billion.
Bitcoin dropped below $38,000 as the cryptocurrency's volatile trading week came to a close. The token climbed back above $40,000 on Thursday but failed to retake the record highs seen one week ago.
Spot gold slid 0.5%, to $1,836.64 per ounce, at intraday lows. The US dollar strengthened against the majority of Group-of-10 currency peers and Treasury yields declined.
Oil prices sank as the stronger dollar cut into its recent climb. West Texas Intermediate crude fell as much as 1.7%, to $52.68 per barrel. Brent crude, oil's international benchmark, dropped 1.9%, to $55.37 per barrel, at intraday lows.
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