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Trading data shows that US stock indices declined on Tuesday amid an increase in coronavirus diseases in the country.
The broad-based S&P 500 sank 0.48% - to 3609.53, while the tech-heavy NASDAQ dropped 0.21% - to 11899.34.
The Dow Jones Industrial Average fell 0.56% - to 29783.35. Recall that on Monday, the index ended trading at a record high level - just below 30000 points. At the same time, the S&P 500 and Russell 2000 reached highs. Analysts said that the simultaneous closing of all three indices at record levels last occurred in January 2018.
The reason for such a sharp rise in the indices on the first day of this week was the encouraging news of pharmaceutical corporations competing in the development of an effective vaccine against COVID-19. On Monday, the positive results of the drug trial were reported by Moderna Inc.
However, on Tuesday, the situation began to change in the opposite direction. Experts attribute the drop in the indices to a decrease in optimism about COVID-19 vaccines against the background of an increase in the incidence rate. In the United States, more than 155 thousand cases of coronavirus were recorded per day, and the number of hospitalized reached another historical high. Local authorities continue to impose strict restrictions on social activity to contain outbreaks of infection.
Investors are also concerned about macro statistics, which turned out to be worse than experts' forecasts. The volume of retail sales in America for October increased by 0.3% compared to September, while analysts expected an increase of 0.5% on a monthly basis. Industrial production in the United States increased by 1.1% in October, but in February, before the start of the COVID19 crisis, it grew by 5.6%.
At the same time, analysts believe that investors have recently become calmer about risk. This happened after the intense presidential struggle began to approach and the first information about the victory of Joe Biden appeared.
However, the most acute problem of the markets today is still a sharp increase in the number of cases of coronavirus infection. Even if investors try not to focus on the new wave of infections, its consequences may be more severe and prolonged than they believe. There is a peculiar clash in the markets today between the short-term prospects of the economy under the influence of the high growth of COVID-19 and the future, where vaccines will put an end to infection and quarantine restrictions.
By the way, the second wave of COVID-19 infections has already affected the American economy. So, quarterly sales of Walmart Inc. are growing much slower than at the beginning of the pandemic, although the population continues to buy food and disinfectants, and the corporation announced holiday discounts in advance. Walmart shares fell by 0.6%.
Tesla shares rose by 9%. And their inclusion in the S&P 500 promises a revival among optimistic investors of the company, which has provided a sharp increase in the value of its securities, by 480% in 2020.
The relatively quiet decline in the Nasdaq is partly due to the rise in Tesla shares. Market participants are preparing for the fact that the securities of this company will be included in the S&P 500 index. However, this will happen only at the end of December, so this growth does not affect the S&P 500 yet.
Walgreens Boots Alliance shares fell by 8.8% after Amazon.com announced the launch of a competing online pharmacy. CVS Health stock has lost 8.9%.
The yield on 10-year US government bonds fell to 0.868% from 0.906% on Monday.
The pan-European Stoxx Europe 600 fell by 0.2%, with shares of major British firms leading the fall.
In the Asia-Pacific markets, stock trading ended mostly with a slight increase: Japan's Nikkei 225 gained 0.4%, Hong Kong's Hang Seng - 0.1%, and China's Shanghai Composite fell by 0.2%.
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