S&P 500 edges back from record high on doubts over bigger stimulus checks

(Reuters) – The S&P 500 retreated slightly from a record high on Friday following a report that Democratic U.S. Senator Joe Manchin opposed bigger direct checks, throwing cold water on possible further stimulus payments.

FILE PHOTO: Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar

Manchin, a moderate Democrat from West Virginia, told the Washington Post in an interview that he would “absolutely not” support a new round of payments, despite Democratic leaders’ calls for $2,000 checks.

Earlier in the day, the S&P 500 and the Nasdaq touched record highs as hopes of more fiscal aid eclipsed data showing the economy shed jobs for the first time in eight months in December.

“Part of the reason the market has rallied in the last couple of days is the expectation of more stimulus, not only short-term but also long-term,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

“The stand that Manchin is taking is against short-term stimulus, but that could have an impact in the long term too. The Senate is barely Democratic. Manchin certainly could go the other way.”

Positive COVID-19 vaccine data and expectations of a bigger fiscal package and infrastructure spending under a Democratic-led U.S. Congress have pushed the S&P 500 above 3,800 points for the first time, and set all three major indexes on track for weekly gains.

Seven of the 11 major S&P sectors dropped, with economy-linked financials, materials and industrials, which have outperformed their peers and scaled record levels this week, dropping more than 1%.

Market participants looked past a report that congressional Democrats plan to introduce articles of impeachment against President Donald Trump on Monday, after a violent crowd of Trump supporters stormed the U.S. Capitol.

At 02:03 p.m. ET the Dow Jones Industrial Average fell 150.64 points, or 0.49%, to 30,890.49, and the S&P 500 lost 5.63 points, or 0.15%, to 3,798.16.

The Nasdaq Composite gained 36.49 points, or 0.28%, to 13,103.96, helped by gains in Tesla Inc and Baidu Inc.

Electric car-maker Tesla jumped 6%, taking its market capitalization to more than $800 billion for the first time ever.

U.S.-listed shares of Baidu gained about 13% on plans to form a company to make smart electric vehicles, according to two sources familiar with the matter.

Declining issues outnumbered advancers for a 1.5-to-1 ratio on the NYSE and a 1.6-to-1 ratio on the Nasdaq.

The S&P 500 posted 83 new 52-week highs and no new low, while the Nasdaq recorded 543 new highs and 25 new lows.

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