- US stocks fell on Friday as dispute over the use of Federal Reserve funds offset positive developments in vaccine distribution.
- Treasury Secretary Steven Mnuchin on Thursday urged the Fed to return funds set aside for emergency loans, putting in place several relief programs for year-end expiration.
- This decision marked a rare episode of disagreement, the Fed having responded with a call to extend “all emergency facilities” beyond their next deadlines.
- Pfizer and BioNTech both won after applying for emergency use authorization for their investigational coronavirus vaccine. The FDA verification process is expected to take a few weeks, setting the stage for deployment in early 2021.
- Watch the main index update live here.
U.S. stocks fell on Friday as disagreement over the use of federal relief funds offset encouraging progress towards approval of the COVID-19 vaccine.
The drop in indices began Thursday night after Treasury Secretary Steven Mnuchin called on the Federal Reserve to return funds set aside for several emergency loan programs. The decision sets an expiration date of December 31 for five facilities, including the municipal liquidity facility and the two business credit programs.
Mnuchin said that while some sectors of the economy continue to struggle during the pandemic, additional fiscal stimulus would help them more than take on more debt.
The Fed quickly responded with a rare public statement, saying the Treasury should expand “all emergency facilities”. The programs continue to serve “as a safety net for our still strained and vulnerable economy,” the central bank added.
Here’s where the US indices were at the market close at 4:00 p.m. Friday:
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“It would be strange for the Fed to make this statement if it believed Mnuchin was legally obligated to act the way he did,” Michael Feroli, chief US economist at JPMorgan, said in a note. “On the contrary, it seems the Fed is making its position clear on this issue.”
The unusual conflict between economic policymakers has hovered over positive news on the vaccine front. Pfizer and BioNTech applied for emergency use authorization from the United States Food and Drug Administration on Friday for their investigational coronavirus vaccine. Both companies won on the news.
The FDA verification process is expected to take a few weeks, and vulnerable populations could receive the vaccine in early 2021.
Vaccine approval comes at a critical time for the US economy. The country reported a record 182,832 new COVID-19 cases on Thursday, according to The COVID Tracking Project. Daily deaths came in just below 2,000 and the number of Americans hospitalized with the virus has exceeded 80,000.
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Major cities continue to implement stricter lockdown measures to combat the spread of the virus in the community. The restrictions threaten to cut critical holiday spending and further slow the U.S. economic recovery. California Governor Gavin Newsom on Thursday set a month-long curfew and public health officials are warning of Thanksgiving travel.
Indicators such as retail sales growth and jobless claims have surprised on the downside in recent weeks, suggesting the rebound is already losing momentum.
The dispute marks an unusual episode of discord between the country’s two main economic decision-makers. While the Fed and Treasury worked hand-in-hand early in the pandemic to introduce the facilities, their disagreement jeopardizes a coordinated policy response going forward.
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Gilead’s shares fell after World Health Organization officials advised against treating COVID-19 patients with its drug remdesivir. There is “no evidence” that the drug improves the chances of survival or the need for ventilation, the organization said in a medical journal.
Bitcoin climbed to $ 18,821.70 before cutting some gains. The jump pushed the cryptocurrency even closer to regaining its 2017 high.
Spot gold rose 0.7%, to $ 1,879.81 an ounce, to intraday highs. The US dollar fell against the majority of its Group of 10 peers, while yields on Treasuries slipped.
Oil prices have gone up. West Texas Intermediate crude rose 1.4% to $ 42.32 per barrel. Brent, the international benchmark for oil, climbed 2.3% to $ 45.21 per barrel, to intraday highs.
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