The US stock market began last week with decline on the reports that Washington is preparing to impose sanctions on 14 Chinese officials for their alleged role in Beijing's ouster of elected opposition lawmakers in Hong Kong.
The market was supported by shares of large tech companies, appreciated due to heightened fears about the impact of restrictions imposed to contain COVID-19 on the economy in the short term. Stocks of companies such as Apple (AAPL), Facebook (FB) and Tesla (TSLA) rallied, supporting the Nasdaq. Energy stocks, meanwhile, showed a decline due to the fall in oil prices. Chevron (CVX), which fell 3.09%, put pressure on the Dow Jones.
On Tuesday the major US stock indexes moved to moderate growth. Market participants watched negotiations between Republicans and Democrats for additional fiscal assistance as US coronavirus cases continued to rise. In addition, the Department of Labor released the report that showed that labor productivity in the United States rose strongly in the third quarter, although the growth rate was likely to be overestimated, as a sharp recovery in production outstripped employment growth. According to the report, productivity in the nonfarm sector, which measures hourly output per worker, rose 4.6% year on year in the last quarter. This was a downward revision from 4.9% last month. Economists forecasted productivity growth of 4.9%.
The next day the market showed negative dynamics again. Investors were weighing the prospects for approval of new fiscal stimulus by US legislators. On the eve of the US Treasury Secretary Mnuchin proposed to the Democrats a new bill to stimulate the economy for $ 916 billion, which, however, does not include additional unemployment benefits, which caused a negative reaction from the Democrats. The market was supported by hopes for the recovery of the American economy associated with the development of an effective vaccine against COVID-19.
The decline in indices continued on Thursday as investors analyzed the rise in jobless claims and progress in negotiations between Republicans and Democrats on a new stimulus package. A Labor Department report showed that the number of initial claims for unemployment benefits in the United States increased more than expected last week as the rise in new cases of COVID-19 infection caused more business restrictions, further evidence that the pandemic and lack of additional financial incentives is detrimental to the economy. According to the report, initial claims for unemployment benefits stood at a seasonally adjusted 853,000 for the week through December 5, up from 716,000 in the previous week. Economists forecasted 725,000 applications.
The week ended in the "red zone" mainly due to slow negotiations between Republicans and Democrats on a new stimulus package. Against this backdrop did not react to the progress made in the coronavirus vaccine approval process developed by Pfizer and BioNTech. A report released by the University of Michigan showed that the consumer sentiment index rose to 81.4 in December from 76.9 in November. The index was expected to drop to 76.5. Chief Consumer Economist Richard Curtin said the unexpected improvement in consumer sentiment was fueled by the sharp change in economic outlook after Biden was elected president. According to the report, the index of current economic conditions rose to 91.8 in December from 87.0 in November, while the index of consumer expectations rose to 74.7 from 70.5.
