NEW YORK (AP) -- Stocks are pulling lower again on Friday after reports showed the pandemic is deepening the hole for the economy, as Washington prepares to throw it another lifeline.
The S&P 500 was down 0.8% in early trading, with stocks of companies that most need a healthier economy taking the sharpest losses. The Dow Jones Industrial Average was down 256 points, or 0.9%, at 30,710, as of 10:10 a.m. Eastern time, and the Nasdaq composite was 0.8% lower.
Stocks have been slowly receding since the S&P 500 set a record high a week ago amid optimism that COVID-19 vaccines and more stimulus from Washington will bring an economic recovery. The S&P 500 is on pace for a 1.1% drop this week, which would be its first in the last three.
Friday offered the first chance for traders to act after President-elect Joe Biden unveiled details of a $1.9 trillion plan to prop up the economy. He called for $1,400 cash payments for most Americans, the extension of temporary benefits for laid-off workers and a push to get COVID-19 vaccines to more Americans. It certainly fit with investors' expectation for a big and bold plan, but markets had already rallied powerfully in anticipation of it.
"To some extent, most of this optimism had been priced in, but the huge figures had also invited some contemplation as to whether the necessary bipartisan support will materialize for this huge sum," Jingyi Pan of IG said in a commentary. "The market appears to be playing it safe," she said.
Biden's Democratic allies will have control of the House and Senate, but only by the slimmest of margins in the Senate. That could hinder the chances of the plan's passage. The proposals could also help lead to higher tax rates for companies, which would crimp the profits that are the lifeblood of the stock market.
The urgency for providing such aid is ramping by the day. On Friday, a report showed that sales at retailers sank by 0.7% in December, a crucial month for the industry. The reading was much worse than the 0.1% growth that economists were expecting, and it was the third straight month of weakness.
Another report showed that inflation at the wholesale level remains low as the worsening pandemic keeps a lid on prices and economic activity.
A big question for investors is what big stimulus for the economy from Washington would mean for interest rates.
Treasury yields have been rallying amid expectations that the government will have to borrow a lot more money to pay for its stimulus, as well as rising forecasts for economic growth and inflation. The yield on the 10-year Treasury zoomed above 1% last week for the first time since last spring and approached 1.20% this week.
That is raising worries about how much further interest rates can go before upsetting the stock market. Low rates help drive investors away from bonds and into stocks, and they have been a major reason investors have been willing to pay prices for stocks that are accelerating much faster than the profits companies are producing. Fed Chair Jerome Powell helped to calm some of those concerns with comments that investors took as leaning toward lower rates for longer.
The yield on the 10-year Treasury was holding steady at 1.11%.
In European stock markets, Germany's DAX lost 1.3%, and France's CAC 40 dropped 1.3%. The FTSE 100 in London was down 0.9%.
In Asia, Japan's Nikkei 225 slipped 0.6%, while the Hang Seng in Hong Kong recovered to close with a 0.3% gain. South Korea's Kospi skidded 2%, while stocks in Shanghai were virtually unchanged.