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Stocks Retreat in Early US Trading Even After Stimulus Deal as COVID-19 Drives New UK Restrictions

12/21/2020 | 09:55am
(MT Newswires) -- The US equity benchmarks were sliding lower in early trading on Monday weighed down by worries in the UK after it warned of a new strain of COVID-19, overshadowing the long-awaited deal reached by lawmakers in the US for more fiscal stimulus.

Stocks were adding to Friday's declines that saw the measures pull back from record highs reached earlier in the week, with most of the sectors on the Standard & Poor's 500 in the red shortly after the open. Energy shares led the losses, down 3.7% as oil prices plunged on the new COVID-19 worries. Financial stocks rose 0.8% in the lone gaining group on the S&P 500.

Chevron (CVX) fell the most on the Dow, sliding 3.9% while Goldman Sachs (GS) added 3.3% and Nike (NKE) jumped 6.4%. That was after the athletics-wear maker said late Friday its fiscal second-quarter results beat expectations and lifted its sales growth outlook for the full year.

But the tone was generally weaker as several countries imposed travel restrictions on the UK after it reported that a mutation of COVID-19 seemed to spread more rapidly and was driving a spike in infections. While the new strain "appears not to cause more serious disease or higher mortality, and it seems likely the vaccines now being deployed will be just as effective in suppressing it, but the danger is that faster spread will overwhelm hospitals," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Stocks were lower even after US politicians reached a deal on stimulus as the country struggles through its COVID-19 outbreak and after months of failed negotiations. Senate Majority Leader Mitch McConnell said on Twitter Sunday that Congress reached an agreement to "pass another rescue package ASAP."

In company news, RealPage (RP) surged 31% after it agreed to be taken private by Thoma Bravo in a deal valued at $10.2 billion including debt. Barnes & Noble Education (BNED) gained 4.8% after saying Fanatics and Lids, which sell sports and other merchandise, will make a $15 million strategic equity investment in the company.

Tesla (TSLA) slipped 4.7% on its first day of inclusion into the benchmark S&P 500 measure. The stock had driven to a record high on Friday.

In morning trading, the S&P 500 was down 0.8% while the Dow and the Nasdaq were both off by about 0.6%.

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