Data signalling a slowdown in consumer spending weighed on Wall Street’s main indexes on Tuesday, but Tesla shares bucked the trend to soar on news it will be joining the S&P 500 in December.
Wall Street’s main stock indexes opened lower on Tuesday weighed down by spiralling COVID-19 infections in the United States that have led to business-sapping virus restrictions and economic news signalling that the engine of US economic growth is slowing.
The Dow Jones Industrial Average kicked off the session on a down note, falling more than 305 points, or 1.09 percent, to 29,623.25.
The broader S&P 500 index – a proxy for the health of retirement and college savings accounts – was down 0.63 percent while the Nasdaq Composite Index opened virtually unchanged.
The Dow and S&P rallied to record closes on Monday after Moderna reported that preliminary trial data showed its COVID-19 vaccine to be 94.5 percent effective.
But a weaker-than-expected reading on US retail sales is bringing down the mood on Tuesday.
Retail sales in the US rose a scant 0.3 percent last month, the US Commerce Department said, while the reading for September was revised downward.
The disappointing numbers signal that the primary engine of the US economy – consumer spending, which accounts for two-thirds of growth – is suffering as COVID-19 restrictions discourage people from spending on goods and services. That ripples throughout the economy as businesses shut their doors early or entirely, or cut costs and staff to try and stay afloat.
The lapsing of virus relief aid, including the $600 federal weekly top to state unemployment benefits that expired at the end of July, is also cutting into retail sales activity.
Meanwhile, Washington remains gridlocked over another stimulus package, leaving millions of people struggling to keep roofs over their heads and food on the table.
People line up to receive free holiday boxes of food from the Food Bank For New York City before the Thanksgiving holiday in the Harlem neighbourhood of New York [File: Brendan McDermid/Reuters]
Long lines at food banks have drawn comparisons to the Great Depression and economists are warning that the economic scarring from the pandemic fallout will likely shape generations to come.
“At some point, the virus will be quashed – either through herd immunity or, perhaps more likely, a vaccine. But the economic consequences will persist for years, even decades,” Neil Shearing, group chief economist at Capital Economics, wrote in a Wednesday report.
Among stocks making moves on Tuesday:
Shares of Tesla Inc vaulted 11.45 percent, after S&P Dow Jones Indices confirmed after the close of trading on Monday that they would add Elon Musk’s electric vehicle maker to the S&P 500 main index starting from December 21. Inclusion in the S&P provides a huge boost to component companies because fund managers that track the index snap up those shares.
Walmart Inc was down 1.27 percent after the mega-retailer posted better-than-expected earnings. Sales were buoyed by consumers using same-day delivery options and store pick-up services to stock up on groceries and essentials.
Shares of Facebook Inc were down 1.02 percent, while shares of Twitter were up 0.51 percent ahead of scheduled testimony on Capitol Hill by the CEOs of the social media giants. Republicans have accused both platforms of anti-conservative bias.
Amazon Inc shares were up 1.37 percent after the online retail behemoth announced it has launched a digital pharmacy that will allow customers to buy prescription medication online.
