Wall Street Drifts Lower As Markets Retreat Worldwide

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NEW YORK  — Wall Street is drifting lower Thursday after mixed reports on the economy highlighted its uncertain path, including one showing that layoffs continue at a stubbornly steady pace.

The S&P 500 was 0.5% lower in afternoon trading, following up on declines across Europe and Asia, as a worldwide rally for markets fades. Stocks in China dropped particularly sharply after a report showed shoppers there are slow to spend even though its economy returned to growth. Treasury yields also sank in a sign of increased caution.

The Dow Jones Industrial Average was down 171 points, or 0.6%, at 26,698, as of 1:42 p.m. Eastern time. The Nasdaq composite was down 0.9%.

Travel-related stocks were leading the S&P 500 toward its first loss in three days as cruise-ship operators, airlines and hotels gave up chunks of their big gains from a day earlier. Drops for Microsoft and other tech titans also weighed particularly heavily because they’re the largest stocks in the index.

They’re the latest ebbs for markets, which have been churning up and down for a little more than a month. Pushing markets higher have been signs of strengthening in the economy as lockdowns have eased, along with massive aid from the Federal Reserve and Congress. Hopes for a potential COVID-19 vaccine also helped the S&P 500 erase most of an earlier 34% drop from its record, down to less than 5% by Wednesday.

But pulling markets lower has been the relentless rise of coronavirus counts across much of the United States, which threatens to undo all the improvements. California has already brought back orders for bars and other businesses to close due to a surge in cases, and the worry is other states will have to follow suit.

Reports on Thursday showed that layoffs across the country remain stubbornly high, with 1.3 million workers filing for unemployment benefits last week. That’s down slightly from the prior week, but only by 10,000. The improvement was also weaker than economists expected.

Worries are already high about joblessness, as $600 in weekly unemployment benefits provided by the federal government is set to expire this month.

The weaker-than-expected jobless data collided with a separate report showing retail sales grew more strongly last month than economists expected, particularly for clothing.

“With coronavirus cases ticking up, the market could be in limbo until we get a clear sign on unemployment aid and some meaningful news on the vaccine front,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.

The yield on the 10-year Treasury fell to 0.61% from 0.63% late Wednesday. It tends to move with investors’ expectations for the economy and inflation.

Tech stocks were among the market’s hardest hit, a turnaround from their remarkably resilient run through much of the pandemic.

Microsoft fell 2%, and Apple lost 1.5%. It’s a rare step back for the giants, which are both still up roughly 30% for 2020 on expectations that they can keep growing almost regardless of the pandemic.

On the winning side were several financial stocks, whose profit reports this week have helped kick off earnings season for the market.

Morgan Stanley rose 2% after it reported much stronger profit for the latest quarter than analysts expected. The Hartford Financial Services Group jumped 4.8% after it said it expects to report second-quarter results above what Wall Street had been forecasting.

Bank of America also turned in a better profit report than expected, but it fell 2.2% after it set aside $4 billion to cover loans potentially going bad amid the recession. That helped keep financial stocks overall in the S&P 500 down 0.2%, after losing an earlier gain.

In Asia, stocks in Shanghai slumped 4.5% for their worst day since February. It’s the third straight drop for them as some froth blows out of the market following a 15% surge in less than two weeks.

Tokyo’s Nikkei 225 lost 0.8%, the Hang Seng in Hong Kong fell 2% and Seoul’s Kospi shed 0.8%.

In Europe, Germany’s DAX lost 0.4%, and France’s CAC 40 was down 0.5%. The FTSE 100 in London dropped 0.7%.

Benchmark U.S. crude oil lost 29 cents to $40.91 per barrel. Brent crude, the international standard, gave up 19 cents to $43.60 per barrel.

By STAN CHOE - July 16. 2020

AP

 

 
 

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