US stocks tread water as uncertainty clouds outlook

Investors are coming to grips with a downshifting economic recovery and stalled government aid.

The US flag is seen outside of the New York Stock Exchange (NYSE) in New York City, United States [File: Andrew Kelly/Reuters]
The US flag is seen outside of the New York Stock Exchange (NYSE) in New York City, United States [File: Andrew Kelly/Reuters]

Wall Street’s main indexes were treading water on Friday as more investors come to grips with the realisation that the United States economic recovery is slowing and more government aid is likely required to keep it on track.

The Dow Jones Industrial Average was hovering near unchanged in mid-morning trading in New York, up 0.15 percent at 26,856.73.

The S&P 500 – a gauge for the health of US retirement and college savings reports – was up just shy of half of a percent, while the tech-heavy Nasdaq Composite Index was down 0.92 percent.

Democrats in the US House of Representatives on Thursday announced they had crafted a new $2.4 trillion virus relief bill that includes employment aid and direct payments to Americans.

Whether Democrats and Republicans will be able to agree on a virus aid package is far from certain though, given the intensifying political acrimony heading into the US presidential election on November 3.

Talks fell apart last month after both parties failed to see eye-to-eye.

Uncertainty spawns volatility and market volatility is forecast to grow worse in the coming week as both President Donald Trump and his challenger Democratic presidential nominee Joe Biden square-off in a debate on Tuesday. The political landscape promises to grow more contentious when Trump announces his justice pick for the Supreme Court.

Among stocks making headlines on Friday:  Shares of warehouse chain Costco were trading down 2.29 percent in morning trading after recording high pandemic-related costs for the second straight quarter.

Drugmaker Novavax was up 12.6 percent after launching a late-stage trial of its experimental coronavirus vaccine in the United Kingdom.

Shares of Boeing were up 2.7 percent after Europe’s main aviation safety regulator said the planemaker’s grounded 737 MAX could receive approval to resume flying in November and enter service by the end of 2020.

The bright spot for aircraft maker Boeing comes as US carriers prepare to layoff and furlough tens of thousands of workers by October 1.

The US airline industry has been appealing for more federal aid to prevent the wave of layoffs, as evidence mounts that the US economic recovery is downshifting.

Consumer confidence and spending in the US has dropped in recent weeks after a slight rise during the Labor Day Weekend.

On Friday, the Commerce Department reported that orders for goods designed to last three years or more advanced modestly in August.

The tepid 0.4 percent increase, “signals the boost from reopenings and fiscal aid has faded and that activity is now more closely aligned with the soft pace of underlying economic activity that has lost significant momentum since the initial stages of the recovery,” said Oxford Economics lead US economist Oren Klachkin.

Source : Al Jazeera

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