Dow and S&P 500 slip as traders weigh vaccine optimism with fears of new year-end restrictions

The Dow Jones Industrial Average and S&P 500 dipped on Monday as fears of additional Covid-19 restrictions offset the optimism around a vaccine rollout.

The 30-stock Dow traded lower by 55 points, or 0.2%. At its session high, the Dow was up more than 200 points and hit an all-time high. The S&P 500 declined by 0.1%. The Nasdaq Composite outperformed, rising 0.7%.

New York City Mayor Bill De Blasio warned earlier in the day that the city could experience a “full shutdown” soon.

“We’re seeing the kind of level of infection with the coronavirus we haven’t seen since May and we have got to stop that momentum, or else our hospital system will be threatened,” de Blasio said.

Shares of companies that would benefit from the economy reopening lagged companies that thrived in the early on in the pandemic. United Airlines dropped 2.5%. Amazon, meanwhile, popped more than 1%.

De Blasio’s warning came as lawmakers in Washington tried once again to push forward on a new coronavirus stimulus package.

A bipartisan group of congressional members plans to release a $908 billion stimulus package. However, some key disagreements remain between both parties, particularly over state and local government aid.

“Politically, debate continues on another fiscal bill, which is much needed for much of the population, but will also create an even larger ‘wall of cash’ for consumers to spend as economies fully reopen,” Tavis McCourt, institutional equity strategist at Raymond James, told clients in a note.

“It is abundantly clear the economy is slowing as local shutdowns continue, but any impact on the equity market has been limited so far. Whether this continues into 1Q is unclear, but our guess is pullbacks will be limited unless something materially changes in the vaccine story,” he added.

Following the Food and Drug Administration’s emergency authorization of Pfizer’s vaccine, the Centers for Disease Control and Prevention Director Robert Redfield signed off on the drug, allowing inoculations to officially move forward for people ages 16 or older.

The U.S. has begun to ship the doses from a Pfizer facility in Michigan to hundreds of distribution centers across the country. The FDA is also slated to publish its assessment on Moderna’s vaccine this week. The first dose of the vaccine was administered in New York City earlier on Monday.

“We expect effective COVID-19 vaccines to be widely available in 2Q21, supporting a return to more normal levels of economic and social activity,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note. “So even with the … rally in global equities since the start of November, we think that there is further upside to come.”

The Covid-19 vaccine is being rolled out amid some of the darkest days of the pandemic in the U.S. More than 2,300 coronavirus related deaths were recorded Saturday, following over 3,300 deaths Friday. New infections continue to explode, with more than 219,000 cases reported on Saturday.

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