Wall Street’s main indexes ended lower on Friday, with the biggest drag coming from big US banks after their earnings reports, while the energy sector was weighed down by a regulatory probe into Exxon Mobil Corp.
At the same time, a rise in new COVID-19 cases in China and more infections and tighter lockdowns in Europe reminded investors that the pandemic and its draining effects never goes away.
Futures trading had losses pencilled in from the brief after-hours session as well as investors worry about the coming week in the US with the weakening economy, Donald Trump’s departure, Presidential inauguration and the continuing growth of COVID cases and deaths in the US, but also in Europe and China.
The S&P 500 banks index lost ground as shares of Wells Fargo & Co, JPMorgan Chase and Citigroup tumbled even though they had posted better-than-expected fourth-quarter profits.
Well Fargo shares fell 7.8%, Citi shared dropped 6.9% and JP Morgan did better but the shares still dipped 1.8%.
The bank sector had rallied sharply in recent days in anticipation of solid results, instead the figures from the trio contained the write-back of billions of dollars in previously deducted bad debt reserves, which made the December quarter figures look better than they really were from operations.
Wells Fargo was the biggest drag on the S&P 500 followed by Exxon Mobil which fell nearly 5%.
By the close the Dow was down 177.26 points, or 0.57%, to 30,814.26, the S&P 500 lost 27.29 points, or 0.72%, to 3,768.25 and the Nasdaq dropped 114.14 points, or 0.87%, to 12,998.50.
For the week the Dow lost 0.9%, the S&P 500 lost 1.48% and Nasdaq lost 1.5%.
Friday also saw Europe’s STOXX 600 index lose 1.01% while MSCI’s gauge of stocks across the globe shed 0.86%.
Emerging market stocks lost 0.93%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.67% lower.
Global share markets were mostly down over the last week.
Besides the fall in US shares, European shares were down 1.2% partly on profit taking after a run of strong gains along with concern about higher bond yields and soft economic data on the back of rising new coronavirus cases. Friday’s fall accounted for most of the drop.
Chinese shares also fell 0.7% for the week but Japanese shares rose 1.4%, though Nikkei futures were pointing to a big fall today of more than 2%.
10-year US bond yields dipped to 1.0852%, down from 1.129% late on Thursday as the uncertainty about COVID and next week’s inauguration of President-election Joe Biden and the possible violence.
Yields also fell on the confirmation of the size and shape of the $US1.9 trillion stimulus package from Biden.
Despite the dip in the benchmark yield, it closed a second week above 1%, a streak not seen since before the lockdowns took hold early last year.
The dollar index rose 0.573%, with the euro down 0.68% to $1.2073, while sterling fell on the day
The Aussie dollar weakened to just under 77 US cents at 76.96, down three quarters of a cent for the week.
Exxon shares fell after a report said that the U.S. Securities and Exchange Commission launched an investigation of the oil major, following a whistleblower’s complaint that it overvalued a key asset in the prolific Permian shale oil basin.
Exxon is due to confirm $US20 billion in asset write downs for the 4th quarter when it reports early next month. Most of those write downs though relate to shale gas holdings in the US and in countries like Argentina.
Meanwhile US December retail sales fell for the third month in a row in the latest sign the economy lost considerable speed at the end of 2020.
Sales dropped 0.7% after a 1.4% (revised from 1.1%) fall in November and a small 0.1% dip in October. That was a drop of 2.2% for the quarter.
“The weaker-than-expected economic data, and especially in parts of the economy like retail sales, is a big driver,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.
“We are seeing sentiment through last week in extreme speculative frothy euphoric optimistic territory,” she said, according to Reuters.
