After an impressive rally on Monday, Tuesday saw US equities slip due to rising COVID-19 cases and discouraging consumer spending data.
The S&P 500 Index declined by about 0.5 percent after hitting new highs on positive vaccine news. Nearly 70 percent of the stocks fell with healthcare and utility stocks proving to be a major culprit.
Nasdaq saw a fall of 0.2 percent despite big giants including Tesla and Amazon gaining. Tesla rose more than 8 percent as inclusion in the S&P 500 Index beckons. Due to its huge market value, the tech giant might end up being one of the top companies in the Index upon entry.
Amazon, which announced its foray into pharma, saw a jump of 0.2 percent. As a result, competitors like CVS Health took a major hit.
The Index suffered due to poor retail numbers – 0.3 percent versus an expected growth of 0.5 percent. Numbers for September were revised down to show correct figures of 1.6 percent compared to 1.9 percent as previously reported.
Excluding gasoline, food services, automobiles, and building materials, retail rose 0.1 percent after a revised 0.9 percent in September, according to the Commerce Department.
Import prices also took a hit of 0.1 percent due to a decrease in oil and gas prices.
“There are warning signs that November and December will be tougher periods for US businesses,” said ING chief international economist, James Knightley. “Covid-19 concerns, squeezed incomes and restricted mobility point to weaker consumer activity.”
Virus cases are expected to surge and the vaccine can take a full year to make an impact. Rescue packages designed to help jobless individuals and businesses struggling to stay afloat will expire at the end of the year.
Since lawmakers failed to agree on a new rescue package before the election period, the cliff is now looming over Joe Biden, who is expected to take the office next year.