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S&P 500 Suffers Weekly Loss as Stocks Slip

11/20/2020 | 05:16pm

By Joe Wallace and Gunjan Banerji

Stocks and government bond yields slipped Friday to end a choppy week and snap a two-week winning streak for the S&P 500.

A rally in the stock market has stagnated recently, after enthusiasm about the development of effective coronavirus vaccines propelled the Dow Jones Industrial Average to its first record close since February at the start of the week.

Surging coronavirus infections, signs that the economy has lost momentum, and the U.S. Treasury's decision to allow several emergency Federal Reserve programs to expire have deflated some of the optimism that had previously dominated the month.

Some investors said the recent moves mark a healthy pause after a vigorous rally since the presidential election that has sent the S&P 500 up 5.6% since Nov. 3.

The broad stock-market gauge slipped 24.33 points, or 0.7%, to 3557.54 on Friday. The Dow fell 219.75 points, or 0.7%, to 29263.48. The tech-heavy Nasdaq Composite lost 49.74 points, or 0.4%, to 11854.97.

"You've got just this spike up with so many stocks," said Mark Stoeckle, chief executive of Adams Funds. "I do think we need a breather here."

The S&P 500 and Dow ended the week down 0.8% and 0.7%, respectively. The Nasdaq notched a gain of 0.2% for the week week.

The declines for the S&P 500 and Dow come as a number of factors have raised concerns among investors in recent days. Treasury Secretary Steven Mnuchin said Thursday that several novel programs that have backed corporate credit and municipal-borrowing markets would end Dec. 31. Mr. Mnuchin asked the Fed to return more than $70 billion in funds that had already been transferred to the central bank to cover loan losses.

The decision raises uncertainty about the degree of support that will be in place for the economy if states impose further restrictions to quell the wave of infections.

Every indicator of the virus's spread across the U.S. continued to accelerate. The country logged its highest-ever number of newly reported Covid-19 infections in a day Thursday. California Gov. Gavin Newsom issued a new stay-at-home order that will require the most of residents to stay at home and businesses to close between 10 p.m. and 5 a.m.

"We're looking at short-term negatives," said Paul Jackson, head of asset allocation research at Invesco. "The markets are busy trying to balance that with the longer-term good news that is coming from vaccines."

These uncertainties have sent investors into traditionally safer bets like government bonds. The yield on 10-year U.S. Treasury notes slipped to 0.828% this week from 0.892% last week, the largest one-week yield decline since August.

In corporate news, shares of Pfizer rose 51 cents, or 1.4%, to $36.70 after the pharmaceutical giant asked U.S. health regulators to permit use of its Covid-19 vaccine. It will be up to the U.S. Food and Drug Administration to decide whether the two-shot vaccine works safely enough to roll out to millions of people.

Tesla shares soared 20% this week to $489.61 after S&P Dow Jones Indices said the stock would be joining the S&P 500 index, a decision that will shake up the benchmark gauge and likely spur volatility in coming weeks as firms jockey to include the company in their funds.

Overseas, the pan-continental Stoxx Europe 600 edged up 0.5%.

The Shanghai Composite Index gained 0.4%, and Japan's Nikkei 225 ticked down 0.4%.

Write to Joe Wallace at Joe.Wallace@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com

(END) Dow Jones Newswires

11-20-20 1716ET

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