Profit Taking Contributing To Modest Pullback On Wall Street

After an initial move to the downside, stocks have moved modestly lower over the course of morning trading on Friday. The major averages pulled back into negative territory after reaching new record intraday highs at the start of trading.

In recent trading, the Dow and the S&P 500 have fallen to new lows for the session. The Dow is down 152.52 points or 0.5 percent at 30,150.85, the Nasdaq is down 25.12 points or 0.2 percent at 12,739.62 and the S&P 500 is down 18.78 points or 0.5 percent at 3,703.70.

The modest pullback on Wall Street may be partly due to profit taking after yesterday’s climb to record closing highs.

Optimism about a new fiscal stimulus bill contributed to the strength on Thursday, although traders may be waiting for more concrete developments before continuing to push stocks higher.

In remarks on the Senate floor, Senate Majority Leader Mitch McConnell, R-Ken., said an agreement on a new relief package appears to be “close at hand” and suggested lawmakers are likely to work through the weekend to reach a deal.

House Speaker Nancy Pelosi, D-Calif., also told reporters that progress has been toward an agreement, mirroring other recent optimistic comments from congressional leaders.

Upbeat news on the coronavirus vaccine front has helped limit the downside for the markets, with an FDA advisory panel giving a positive recommendation to Moderna’s (MRNA) vaccine candidate.

Additionally, Johnson & Johnson (JNJ) said the first late-stage trial for its vaccine candidate is now fully enrolled, with the healthcare giant expecting interim data by late January.

On the U.S. economic front, a report released by the Conference Board showed its index of leading U.S. economic indicators increased by slightly more than expected in the month of November.

The Conference Board said its leading economic index rose by 0.6 percent in November after climbing by 0.8 percent in October. Economists had expected the index to increase by 0.5 percent.

“The US LEI continued rising in November, but its pace of improvement has been decelerating in recent months, suggesting a significant moderation in growth as the US economy heads into 2021,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board.

Most of the major sectors are showing only modest moves on the day, although notable weakness is visible among oil service stocks.

The Philadelphia Oil Service Index is down by 1.2 percent, with the weakness in the sector coming despite an increase by the price of crude oil.

On the other hand, networking stocks have shown a strong move to the upside, driving the NYSE Arca Networking Index up by 1.2 percent to its best intraday level in almost twenty years.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index edged down by 0.2 percent, while China’s Shanghai Composite Index slipped by 0.3 percent.

The major European markets have also showed a modest move to the downside on the day. While the French CAC 40 Index has dipped by 0.3 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both down by 0.1 percent.

In the bond market, treasuries are showing a lack of direction after ending the previous session slightly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 0.926 percent.

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