Wall Street stumbles as markets sink worldwide; Dow down 300
NEW YORK (AP) — Stocks are falling on Wall Street Thursday as the market’s see-saw week snaps back downward.
The S&P 500 was 1% lower in midday trading, following steeper losses in Europe and milder ones across much of Asia. Treasury yields also fell in a sign of increased caution, while gold ticked down from its record level.
The Dow Jones Industrial Average was down 348 points, or 1.3%, at 26,191, as of 11:05 a.m. Eastern time. It pared an earlier loss of 547 points, while the Nasdaq composite was down 0.5%.
The losses come after a report showed that layoffs are continuing at their stubborn pace across the country, denting hopes that the economy can recover nearly as quickly as it plummeted into recession. A separate report on Thursday showed that the U.S. economy contracted at a nearly 33% annual rate in the spring, the worst quarter on record.
Markets worldwide had already turned lower before those reports were released. An earlier report showed that Germany’s economy, Europe’s largest, suffered through its worst quarter on record during the spring, a contraction more than twice as sharp as during the Great Recession.
The losses for markets accelerated following the U.S. data reports, as well as a tweet from President Donald Trump suggesting the United States delay its presidential election in November, though that would require an act of Congress to do.
It all added to a frantic day for markets, which is scheduled to be the busiest for profit reports among S&P 500 companies within the busiest week this earnings season. Investors had already been expecting Thursday’s reports on the economy to be weak, “so the real story for traders today is earnings,” said Chris Larkin, managing director of trading and investment product at E-Trade Financial.
Earnings reports have mostly been better than Wall Street’s expectations so far, but they’ve been far below year-ago levels, before the pandemic struck. The big companies in the S&P 500 are on track to report a nearly 40% drop for the second quarter from a year earlier, according to FactSet.
With four of the biggest companies in the world set to report their quarterly results shortly after markets close on Thursday, Larkin said trading is likely to be bumpy.
Thursday’s loss for the S&P 500 nearly mirrors its jump from the day before, when the Federal Reserve pledged to keep interest rates at their record low but highlighted how uncertain the path is for the economy, and how it’s mostly dependent on what happens with the coronavirus pandemic. If the market stays at its current level, it would be the second time that the index has flip-flopped this week.
Energy stocks had some of the market’s sharpest losses, dropping in concert with oil prices amid worries about weaker demand amid a struggling global economy. Exxon Mobil dropped 4.2%, and ConocoPhillips lost 5.6%.
Financial stocks were also weak, hurt by a drop in interest rates that reins in the profits to be made from lending. JPMorgan Chase fell 3.1%, and Citigroup lost 4.4%.
On the winning end was UPS, which jumped 15.4% after reporting revenue and profits for the spring that blew past analysts’ expectations. It benefited from more people getting deliveries at home amid the pandemic.
Apache soared 21.4% for the biggest gain in the S&P 500 after it said it made a major discovery of oil off the coast of Suriname.
Technology stocks held up better than the rest of the market, as they have through the pandemic. The sector fell 0.7%, less than half the decline of financial stocks.
Four of the biggest tech-oriented companies are scheduled to report their latest quarter results after trading ends. Amazon, Apple, Facebook and Google’s parent company are all up more than 12% this year, when the S&P 500 is down 0.2%. Amazon is up more than 60%.
Investors have continued to flock to such stocks on expectations that sales for the companies will continue to explode as the pandemic accelerates life’s shift toward online. But with great expectations also comes the possibility of great disappointment, and discouraging reports from the four would have big effects on the market. They alone account for nearly 16% of the S&P 500 by market value.
Investors are also continuing to wait for signs of progress from Capitol Hill, where Congress is debating how and whether to offer more aid for the economy ravaged by the pandemic. An extra $600 in weekly unemployment benefits from the federal government is about to expire, and that cash is growing in importance as the number of laid-off workers ticks higher.
A little more than 1.4 million U.S. workers applied for unemployment benefits last week, according to a Thursday report from the Labor Department. That’s up by 12,000 from a week earlier.
The yield on the 10-year Treasury fell to 0.55% from 0.58% late Wednesday. It tends to move with investors’ expectations for the economy and inflation.
Gold pulled back a bit from its record heights, offering at least a pause to its huge rally amid a weakening dollar, rock-bottom interest rates and worries about the economy. It fell 0.9% to $1,935.40 per ounce.
Benchmark U.S. crude dropped 3.6% to $39.78 per barrel. Brent crude, the international standard, lost 3.2% to $42.66 per barrel.
In European stock markets, Germany’s DAX lost 4.2%, and France’s CAC 40 dropped 2.8%. The FTSE 100 in London was down 2.9%.
In Asia, Japan’s Nikkei 225 slipped 0.3%, South Korea’s Kospi added 0.2% and Hong Kong’s Hang Seng dropped 0.7%. Stocks in Shanghai slipped 0.2%.
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