U.S. equities finished lower, weighed by headlines about worsening COVID-19 trends renewed lockdowns in Europe. 

While cyclical sectors, reopening stocks, and the value were under pressure, tech outperformed, helping the NASDAQ stay in positive territory. 

Consistent with the cautious market undertone, bonds rallied, as the 10-year Treasury yield fell to 1.54 percent and the dollar appreciated against other currencies. 

WTI oil was down 3.6 percent to $76, about 10 percent off its October peak of $85.

European stocks added to their year-to-date underperformance relative to U.S. stocks, as Austria entered the fourth national lockdown and Germany is considering a similar move to combat another COVID-19 surge. 

U.S. cases are also on the rise, as the FDA authorized Moderna and Pfizer’s booster shots for all U.S. adults.

With vaccines broadly available and expectations for COVID-19 pills to be approved shortly, the potential economic impact from another virus wave will likely be manageable without another sharp decline in mobility. 

From an investment standpoint we could see renewed pressure on reopening and cyclical stocks, while work-from-home, tech and general growth stocks could get another boost as the health uncertainty continues.

Despite today’s risk-off sentiment, global stocks continue to hover near records, supported by strong corporate earnings growth. 

This week retail and tech earnings were in focus, with results highlighting the strong demand trends, consumer resiliency, and high profitability despite pricing pressures.

On the fiscal front, lawmakers in the U.S. House of Representatives voted on and passed President Joe Biden’s economic plan. 

The Congressional Budget Office estimated that it would add $367 billion to budget deficits over a decade but did not account for any revenue uncertain.

As it stands now, the plan would provide universal pre-K, extend the expanded child tax credit, allow Medicare to negotiate prescription drug prices, and offer tax credits for renewable energy and electric-vehicle purchases, among other measures. 

To raise revenue it would impose a new 15 percent corporate minimum tax and a 5 percent surtax on individual incomes over $10 million, with an additional 3 percent tax above income of $25 million. 

On the central-bank front, the White House is set to announces its decision on the Fed chair soon, with a Powell renomination still the most likely scenario.

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