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Stocks Slide As Virus Vaccine Effect Wears Off

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Key Points

  • Stocks slid Thursday as a week-long rally sputtered, with sentiment split between vaccine hopes and Joe Biden’s US election win on the one side and fears of a coronavirus surge that threatens economic recovery on the other.
  • The Dow and wider S&P 500 were both in the red in late-morning trading, while the tech stocks that have profited from lockdowns helped push the Nasdaq Composite higher.
  • In European trading, London’s benchmark FTSE 100 index shed 0.7 percent, hit also by official data showing the UK economy slowing once more after exiting a record recession.
  • Visit The Financial Today’s homepage for more stories.

LONDON — Stocks slid Thursday as a week-long rally sputtered, with sentiment split between vaccine hopes and Joe Biden’s US election win on the one side and fears of a coronavirus surge that threatens economic recovery on the other.

“The near-certainty of a horrible few months ahead for the United States (and Europe) given current infection, hospitalization and death rates, is dominating sentiment just at the moment,” said National Australia Bank’s Ray Attrill.

And the slow rollout of vaccines is also giving investors pause, said market analyst Joshua Mahony at online trading firm IG.

“Despite hopes that a vaccine will spark a rousing recovery in economic activity, the likeliness is that the virus will continue to stifle any such rebound owing to the gradual nature of any such rollout,” he said in a note to clients.

The Dow and wider S&P 500 were both in the red in late-morning trading, while the tech stocks that have profited from lockdowns helped push the Nasdaq Composite higher.

Sentiment wasn’t improved by only a modest reduction in first-time unemployment claims last week.

In European trading, London’s benchmark FTSE 100 index shed 0.7 percent, hit also by official data showing the UK economy slowing once more after exiting a record recession.

Frankfurt gave up 1.2 percent, and Paris fell 1.5 percent as coronavirus cases continue to rise on the continent despite tougher restrictions.

‘Winter of Despair’

The mood across trading floors had been positive for much of the week after former vice president Biden beat Donald Trump and US pharma giant Pfizer said its vaccine candidate was 90 percent effective in trials.

Hopes that a treatment for the killer disease will be rolled out before 2021 put a rocket under stocks such as airlines that have been battered for most of the year.

Analysts said the massive central bank and government stimulus will help to maintain a level of positive market sentiment.

“Once we have made it through what is still bound to be a winter of despair for health care concerns, it could trigger the mother of all economic rebounds boosted by unprecedented policy support,” said Axi strategist Stephen Innes.

Investors are also keeping tabs on developments in Washington as Trump refuses to concede last week’s election while launching legal challenges after claiming without evidence that there was massive voting fraud.

His stubbornness has fuelled concerns about the transition to Biden and also led to questions about whether US lawmakers will be able to push through with their much-needed additional economic stimulus.

Key Figures (1630 GMT)

London – FTSE 100: DOWN 0.7 percent at 6,338.94 points (close)

Frankfurt – DAX 30: DOWN 1.2 percent at 13,052.95 (close)

Paris – CAC 40: DOWN 1.5 percent at 5,362.57 (close)

EURO STOXX 50: DOWN 1.1 percent at 3,428.20

New York – Dow: DOWN 0.4 percent at 29,270.28

Tokyo – Nikkei 225: UP 0.7 percent at 25,520.88 (close)

Hong Kong – Hang Seng: DOWN 0.2 percent at 26,169.38 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,338.68 (close)

Euro/dollar: UP at $1.1813 from $1.1781 at 2115 GMT

Pound/dollar: DOWN at $1.3133 from $1.3218

Dollar/yen: DOWN at 105.16 yen from 105.42 yen

Euro/pound: UP at 89.54 pence from 89.11 pence

West Texas Intermediate: UP 0.6 percent at $41.69 per barrel

Brent North Sea crude: UP 0.3 percent at $43.94 per barrel

Image by Dave Center

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