The Dow closed lower Tuesday as signs the consumer is in fragile shape during the crucial holiday period weighed on sentiment and overshadowed the approval of the $900 billion stimulus package on Capitol Hill.
The Dow Jones Industrial Average fell 0.67%, or 200 points. The S&P 500 was down 0.21%, while the Nasdaq Composite rose 0.51%.
The Conference board’s consumer confidence gauge fell to 88.6 in December from 92.9 in September, missing economists' forecast for a reading of 97.
"Confidence overall is likely to get worse before it gets better, but another round of stimulus should help to soften the blow a little bit, bridging the gap to the post-vaccine world," Jefferies (NYSE:JEF) said in a note.
U.S. lawmakers passed a $900 billion stimulus bill that will include direct payments to Americans and small businesses, with about $8 billion of aid in support of the vaccine distribution.
President-elect Joe Biden touted further stimulus to come in the new year. "Congress did its job this week," Biden said. "I can and I must ask them to do it again next year," he added.
Optimism over the successful passage of a stimulus bill was growing in recent weeks, helping markets extend their gains into overbought territory, raising the prospect of profit taking.
"Overall, U.S. equities in general are currently overbought / extended on the charts- and so we remain on guard for profit-taking / consolidation heading into Q1," Janney said in a note.