Big Biden stimulus no balm for US stocks, Dow loses 0.6%

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President-elect Joe Biden.
President-elect Joe Biden.
Drew Angerer/Getty Images

New York, Jan 15, 2021 (AFP) -President-elect Joe Biden's massive plan to help the US economy didn't shake Wall Street's downbeat sentiment on Friday, with major indices losing ground in the last full trading week of Donald Trump's presidency.

Markets opened to news that retail sales in December had slid farther than expected as consumers and businesses struggled under the weight of rising Covid-19 cases, while major banks unveiled mixed earnings reports while hoping Covid-19 vaccines will bring better days.

The benchmark Dow Jones Industrial average closed down 0.6 percent at 30,814.26, while the broad-based S&P 500 lost 0.7 percent to finish at 3,768.25.

The tech-rich Nasdaq Composite Index closed at 12,998.50 after losing 0.9 percent, underscoring Wall Street's retreat from records set last week.

Overall, the Dow lost 0.9 percent for the week, and the Nasdaq and S&P 500 lost 1.5 percent.

Trump will on Wednesday hand over power to Biden, who has proposed spending $1.9 trillion to help the US economy come back from the mass layoffs and sharp downturn in growth caused by the Covid-19 pandemic.

The package, unveiled after markets closed Thursday, includes everything from expanded unemployment benefits to tax credits aimed at poor Americans to money to fight infections, but Wells Fargo Advisors warned traders are finding things in the proposal they don't like.

"Sentiment is being dampened, however, amid speculation that the increase in government spending could bring about higher taxes," they said in an analysis.

Also spooking Wall Street was the Commerce Department's report that retail sales declined 0.7 percent in December despite holiday shopping, underscoring that the US economy was far from healed.

Among fourth-quarter bank earnings, JPMorgan reported record quarterly profits of $12.1 billion, but Citigroup said earnings dipped seven percent to $4.6 billion. At Wells Fargo, profits edged up four percent to $3.0 billion as revenues fell 10 percent.

Wall Street pushed all three institutions, with shares of JPMorgan falling 1.2 percent to $138.64 at the close, Citigroup sinking 6.9 percent to $64.23 and Wells Fargo diving 7.8 percent to $32.04.

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