Dow Retreats From Record High as McConnell Blocks Stimulus Check Boost

©  Reuters © Reuters

By Yasin Ebrahim

Investing.com – The Dow cut its gains after hitting a fresh record high Tuesday, with losses in energy offsetting gains in health care after Senate Majority Leader Mitch McConnel blocked the Democrats' attempt to pass a bill aimed at boosting direct payments to struggling Americans.

The Dow Jones Industrial Average fell 0.25%, or 76 points, after hitting an intraday high of 30,588.79. The S&P 500 was down 0.19%, while the Nasdaq Composite slipped 0.35%. All three major average hit intraday record highs before paring gains.

McConnell blocked Senate Minority Leader Chuck Schumer's attempt to approve the bill to increase direct payments to $2,000 from $600.

Ahead of the objection, McConnel said the Senate would evaluate the prospect of boosting stimulus checks alongside other measures raised by President Donald Trump including the repeal of a law that offers protection for tech companies and concerns about election fraud.

Last week, Trump urged lawmakers to increase stimulus checks after calling the initial $600 per week payments a "disgrace."

The move away from record highs in the major averages was paced by a decline in energy stocks as oil prices retreated from the highs of the day amid ongoing concerns over further restrictions as the new Covid-19 variant continues to spread globally.

Technology also played a role in the general market malaise, as the Fab 5, with the exception of Amazon.com (NASDAQ:AMZN) and Facebook (NASDAQ:FB), gave back some of their gains from a day earlier.

Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) were in the red.

Snap (NYSE:SNAP), meanwhile, jumped 5% after Goldman Sachs (NYSE:GS) raised its price target on the stock to $70 from $47 on expectations for a better-than-expected fourth-quarter performance.

Chinese tech giant Alibaba (NYSE:BABA) rose 7% as its tech affiliate Ant Group is considering setting up a financial holding company to be regulated more like a bank, Bloomberg reported, citing sources.

The move is expected to appease demands from People's Bank of China, but is unlikely to stifle the company's ability to operate beyond its payment services business.

In chip stocks, Intel (NASDAQ:INTC) jumped 5% after Reuters reported that the chipmaker was advised by Third Point (NYSE:TPRE) CEO Daniel Loeb to explore strategic alternatives to boost its stock price.

The reversal in stocks comes as some on Wall Street appear to be positioning for a double-digit correction in markets as 2021 nears, citing macro and pandemic concerns.

"Our optics indicate that potential corrective waves ahead could trigger drawdowns as high as -10-15% from current levels on key benchmarks like the S&P 500…" Janney said. "Triggers are likely to be macro-based, with ongoing developments on the pandemic / vaccine front contributing a significant portion of 'headline risk' in the New Year."

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