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Stocks Open Lower After Joe Biden Plan Raises Tax Concerns

01/15/2021 | 09:49am EST

By Caitlin Ostroff

U.S. stocks edged lower Friday as some investors grew concerned that President-elect Joe Biden's $1.9 trillion Covid-19 relief plan could lead to higher taxes.

The S&P 500 fell 0.3%, indicating the benchmark index may decline for a second day. The Nasdaq Composite picked up 0.2%, while the Dow Jones Industrial Average slipped 0.6%, about 180 points.

The S&P 500 is on track to end the week lower, erasing some of the gains made in early January when the gauge rallied to a record high. Markets have for weeks cheered Democrats' plans to expand government spending and bolster the economic rebound. But the size of Mr. Biden's plans, laid out late Thursday, served to check some of that optimism.

"The magnitude obviously was surprising on the upside," said Wei Li, head of investment strategy for BlackRock's exchange-traded fund and index investments for Europe, Middle East and Africa. "With the Senate majority, [taxes] could be coming in the medium term and that is something the market has to assess as well."

Ahead of the opening bell, JPMorgan Chase shares edged down less than 1%. The bank on Friday reported its highest-ever quarterly profit, though its full-year earnings fell 20%. Shares of Wells Fargo fell 3.7% after its revenue fell more than forecast, with lower interest rates weighing on net interest income. Citigroup slid over 2% as it reported fourth-quarter results.

Shares in Exxon Mobil slipped 3% premarket after The Wall Street Journal reported that the Securities and Exchange Commission launched an investigation into the energy giant after an employee filed a whistleblower complaint last fall alleging that it overvalued one of its most important oil and gas properties.

In the broader market, investors are hoping that additional spending will help steer the U.S. economy through a winter that has seen high Covid-19 infection rates and worsening economic data. Figures released Thursday showed that the number of workers filing for jobless benefits posted its biggest weekly gain since the pandemic hit last March.

"When you see data this bad, you have to question if the prevailing expectation -- for cyclical recovery to come through -- if that would be shaken," Ms. Li said.

Fresh data on Friday showed that Americans held back on spending in December during the holiday season as the country confronted a surge in coronavirus infections. Retail sales decreased a seasonally adjusted 0.7% from a month earlier, marking the third straight month of decline in the Commerce Department's measure of spending at stores, vehicle dealerships, restaurants and online

Investors will also get an indication of how confident American households are when the University of Michigan releases preliminary January figures for its consumer sentiment index at 10 a.m. ET. Consumer spending accounts for more than two-thirds of U.S. economic activity.

In bond markets, the yield on the 10-year Treasury note ticked lower to 1.099%, from 1.128% Thursday. Yields fall when bond prices rise.

Despite days that see a pullback in markets, investors still expect that the additional fiscal stimulus will support a rally in stocks this year.

"Ultimately, you can't expect equities to go up every day in a straight line," said Mike Bell, global market strategist at J.P. Morgan Asset Management. "The numbers are really quite incredible and I think it is going to all add up to a boom in growth once the vaccines are rolled out."

Overseas, the pan-continental Stoxx Europe 600 fell 0.8%.

Trading in Asia ended on a mixed note. China's Shanghai Composite was largely flat, while Hong Kong's Hang Seng gained 0.3% and South Korea's Kospi slid 2%.

In Hong Kong, shares in Xiaomi, a consumer electronics company that focuses on mobile phones and household appliances, closed 10% lower after the U.S. Department of Defense added Xiaomi to a list of companies it says support China's military.

--An

artificial-intelligence tool

was used in creating this article.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

01-15-21 0948ET

Stocks mentioned in the article
ChangeLast1st jan.
CITIGROUP INC. 2.25% 64.11 Delayed Quote.6.16%
DJ INDUSTRIAL -0.19% 34297.73 Delayed Quote.-5.43%
DOW JONES AFRICA TITANS 50 INDEX 0.15% 541.79 Delayed Quote.0.73%
EXXON MOBIL CORPORATION 2.94% 74.93 Delayed Quote.22.45%
GUIZHOU BC&TV INFORMATION NETWORK CO.,LTD -9.17% 5.94 End-of-day quote.6.64%
HANG SENG -1.75% 24213.07 Real-time Quote.3.49%
JPMORGAN CHASE & CO. 1.09% 146.53 Delayed Quote.-7.46%
KOSPI COMPOSITE INDEX -2.40% 2724.2 Real-time Quote.-8.48%
LONDON BRENT OIL 0.01% 88.01 Delayed Quote.13.75%
NASDAQ 100 -2.48% 14149.121604 Real-time Quote.-11.09%
NASDAQ COMP. -2.28% 13539.294893 Real-time Quote.-11.44%
S&P 500 -1.22% 4356.45 Delayed Quote.-7.47%
S&P AFRICA 40 INDEX 0.06% 176.42 Delayed Quote.0.83%
S&P/CITIC 300 INDEX 0.25% 4260.47 Delayed Quote.-3.20%
S&P/CITIC 50 INDEX 0.24% 4048.58 Delayed Quote.-1.94%
SHANDONG LINGLONG TYRE CO., LTD. -2.97% 31.74 End-of-day quote.-13.16%
SICHUAN CHANGHONG ELECTRIC CO.,LTD. -5.97% 2.99 End-of-day quote.-9.67%
STOXX EUROPE 600 0.71% 459.59 Delayed Quote.-6.45%
WELLS FARGO & COMPANY 0.51% 53.59 Delayed Quote.11.69%
WTI -0.03% 85.265 Delayed Quote.13.90%
XIAOMI CORPORATION -3.19% 17.62 End-of-day quote.-6.77%
YANKUANG ENERGY GROUP COMPANY LIMITED -2.76% 18.32 End-of-day quote.18.19%
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