Nasdaq logs record close but Dow, S&P 500 end lower, in solid week for Wall St.

U.S. stock indexes ended Friday’s session mostly lower after posting fresh record highs earlier in the week, as reports showed that lockdown measures to combat the COVID-19 pandemic are taking an economic toll in Europe, and as President Joe Biden’s proposed new round of fiscal stimulus ran into opposition in the Senate.

How did stock benchmarks perform?

  • The Dow Jones Industrial Average
    lost 179.03 points to reach 30,996.98, a decline of 0.6%.

  • The S&P 500 index
    closed 11.60 points lower, or 0.3%, at 3,841.47.

  • The Nasdaq Composite Index
    gained 12.15 points, 0.1%, to close at a record high at 13,543.06.

For the week, the Dow gained 0.6%, the S&P 500 was up 1.9%, and the Nasdaq jumped 4.2%. The small-cap Russell 2000
which rallied 1.3% on Friday to close at a record high at 2,168.76, finished the week up around 2.2%.

What drove the market?

Investors found few reasons to buy stocks on Friday after a round of records this week, with the acceleration of new coronavirus cases and lockdowns around the globe undermining support for equities.

The global tally for confirmed COVID-19 cases climbed above 97.5 million on Friday, according to data aggregated by Johns Hopkins University, while the death toll rose above 2.09 million.

U.K. Prime Minister Boris Johnson said that the country’s current lockdowns could last into the summer. COVID-19 cases are also being reported again in China for the first time in months, with 103 new infections, while Hong Kong has seen its first lockdown, just ahead of Lunar New Year festivities, a popular holiday in Asia.

In the U.S., Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, returned to the daily White House briefing on Thursday and said new data shows that vaccines currently on the market may be less effective in battling variants of COVID-19.

Data showed the flash eurozone purchasing managers index dropping in January to a two-month low, raising the possibility of another recession.

But U.S. stocks came off their session lows after IHS Markit purchasing managers surveys for U.S. service and manufacturing sectors for January posted good results, compared with December. The index for services—by far the largest sector of the economy—rose to a two-month high of 57.5 in January from 54.8 in the prior month, while a survey for the U.S. manufacturing sector climbed to a record 59.1 from 57.1. Both readings suggest that the U.S. economy is getting off to a solid start in 2021.

U.S. existing home sales in December increased less than 1% to 6.76 million, the National Association of Realtors said.

Hopes are high for decisive steps from the Biden administration, on both the public-health and economic crises, and markets are likely just treading water while waiting for some clarity, said Keith Hembre, chief investment officer for Minneapolis-based Liniam Capital.

“Without some sort of catalyst to push things higher, I think the gravitational pull is probably flat to somewhat lower just given where valuations are and the fact that there’s been a lot of force driving the market up since November, and that’s probably beginning to wane a little bit,” Hembre said in an interview.

Analysts doubt that a $1.9 billion relief package proposed by Biden will remain intact in the Senate as the new president seeks to gather consensus in Congress on further fiscal spending.

But Hembre thinks something decisive — a fresh round of fiscal spending, a clear sense of progress on the vaccine rollout, or even some big positive surprises from corporate earnings, like Netflix Inc.’s
recent results — is needed to jolt markets past the current holding pattern.

“I would argue that there’s been a much more bullish disposition on the part of market participants as well,” Hembre said. That means there may some opportunities for some of the air to come out of the market in the coming weeks.

Investors are also concerned that impeachment proceedings in the Senate against former President Donald Trump may delay progress on Biden’s fiscal stimulus bill. The impeachment articles for former President Donald Trump are expected to be delivered to the Senate on Monday. The House voted last week to impeach Trump, for a second time, alleging that the 45th president incited a mob that stormed the U.S. Capitol on Jan. 6.

Investors also watched quarterly results, with a focus on Intel Corp. INTC whose shares slumped Friday after posting results late Thursday on its plans to address longer-term problems.

Also, International Business Machines Corp. IBM nearly booked only the seventh double-digit percentage decline in about 50 years Friday, after a fourth-quarter earnings report gave little hope for change at the storied tech company. On Thursday afternoon , the company reported a decline in adjusted net income for at least the seventh consecutive year, and a step down in sales for the eighth year out of the past nine, according to FactSet records.

Separately, former Federal Reserve Chairwoman Janet Yellen’s nomination for Treasury Secretary, becoming the first woman to hold that position, scored unanimous consent by the Senate Finance Committee and was expected to be confirmed by the full Senate.

Which stocks were in focus?
  • Walt Disney Co
    was upgraded to buy from neutral at UBS, with the broker lifting its price target on the entertainment giant to $200 from $155. Shares were up 0.9%.

  • IBM‘s stock
    closed down nearly 10% one day after its quarterly update.

  • Intel‘s shares
    slid more than 9% Friday after its earnings report.

  • Shares of Schlumberger Ltd.
    were in focus after the oil services company topped profit forecasts, and beat revenue expectations for the first time in four quarters. Shares closed 0.9% higher.

  • Aurora Cannabis Inc.’s
    $125 million bought-deal financing isn’t surprising, but may not be enough for the Canadian company to establish a needed foothold in the U.S., Jefferies analyst Owen Bennett said Friday. Shares lost 4.6% Friday.

  • Shares of Climate Change Crisis Real Impact I Acquisition Corp.
     soared nearly 65% after the special-purpose acquisition company announced a deal in which EVgo Services LLC will go public. EVgo, which boasts being the “nation’s largest electric vehicle public fast charging network,” said it expects $575 million in proceeds from the merger deal.

  • GameStop Corp.
    shares gained 50.5% Friday, putting it on track for a record.

How did other assets fare?
  • The yield on the 10-year Treasury note
    slipped about 3 basis points to around 1.085% as investors took a risk-off tone Friday. Yields and bond prices move in opposite directions.

  • The ICE U.S. Dollar Index 
     a measure of the currency against a basket of six major rivals, was up 0.1% on the day but headed for a weekly decline of 0.5%.

  • Oil futures traded sharply lower as the spread of COVID-19 in Europe and Asia came into focus. March futures
    fell 86 cents, or 1.6%, to settle at $52.27 a barrel on the New York Mercantile Exchange.  Gold futures
     retreated as the dollar edged up, with the February contract 
    losing $9.70, or 0.5%, to settle at $1,856.20 an ounce,

  • In Europe, the Stoxx 600 Europe index

     closed 0.6% lower, while London’s FTSE 100
     lost 0.3%.

  • In Asian trade, the Shanghai Composite
     fell 0.4%, China’s CSI 300 
     closed up less than 0.1%, while Hong Kong’s Hang Seng Index
     fell 1.6% and Japan’s Nikkei 225
     closed 0.4% lower.