Wall Street muted as stimulus hopes collide with dismal private jobs data

(Reuters) – Wall Street’s main indexes lost their momentum on Wednesday as investor sentiment was divided between optimism stemming from a potential coronavirus fiscal package and COVID-19 vaccine breakthroughs and a bleak private jobs report.

FILE PHOTO: The U.S. flag is seen on a building on Wall St. in the financial district in New York, U.S., November 24, 2020. REUTERS/Brendan McDermid/File Photo

Treasury Secretary Steven Mnuchin said President Donald Trump supported a proposal put forth by Republican Majority Leader Mitch McConnell though it was unclear the relief measure would pass the Democratic-controlled House of Representatives.

U.S. House Majority Leader Steny Hoyer also expressed hope that a deal could be reached “in the next few days.”

Underscoring the need for fiscal stimulus, data showed private payrolls increased less than expected in November, likely as soaring new infections and business restrictions hampered the labor market’s recovery.

The more crucial jobs report is due on Friday.

“It reminds investors that we do have some tough times ahead before we get to normal,” said Arian Vojdani, investment strategist at MV Financial in Bethesda, Maryland.

“But I don’t think this is signifying a protracted downturn. Markets continue to run based on the positive news we’ve seen on vaccines and how forward ahead the market is looking.”

Positive updates on coronavirus vaccine have helped investors raise bets on a swift economic rebound next year, powering the Wall Street’s main indexes to life-highs recently.

Pfizer Inc and BioNTech’s COVID-19 vaccine got the green light for use in Britain, the first Western country to approve a shot for COVID-19. Pfizer rose 3.5% and BioNTech added 6%.

A rotation into value stocks continued on Wednesday with banks and energy stocks leading gains, while market leaders technology dropped 0.5%.

At 12:18 p.m. ET, the Dow Jones Industrial Average fell 25.57 points or 0.09% to 29,798.35 and the S&P 500 gained 0.81 points or 0.02% to 3,663.25.

The Nasdaq Composite lost 13.94 points, or 0.11%, to 12,341.16, weighed down by a 3% slide in the shares of soon-to-be an S&P 500 member Tesla Inc.

Getting a generous stimulus package through Congress is a top priority, President-elect Joe Biden said in an interview with the New York Times. He also said he would not immediately cancel the Phase 1 trade deal that President Donald Trump struck with China.

The biggest drag on the blue-chip Dow was a near 8% drop in Salesforce.com Inc after it agreed to buy workplace messaging app Slack Technologies Inc in a $27.7 billion deal as it bets on an extended run for remote working.

Cloud data service provider NetApp’s shares jumped 10% after it forecast third-quarter profit above expectations.

Later in the day, investors will turn to the Federal Reserve’s Beige Book report, which will give a glimpse of the state of the economy based on conversations with business contacts.

Advancing issues outnumbered decliners by a 1.1-to-1 ratio on the NYSE. Declining issues outnumbered advancers by a 1.2-to-1 ratio on the Nasdaq.

The S&P 500 posted 13 new 52-week highs and no new low, while the Nasdaq recorded 91 new highs and nine new lows.

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