Stocks fell on Wall Street on Wednesday, sending the market to its first loss in three days, after more depressing data rolled in on the devastation sweeping the global economy.
The Standard & Poor’s 500 index dropped 0.7%, but the losses would have been much worse if not for continued gains for technology stocks. Momentum for Microsoft, Apple and other tech stocks has proved to be nearly unstoppable this year, even in the face of the coronavirus pandemic, and more gains for them almost single-handedly kept Wall Street steady for much of Wednesday’s trading.
The S&P 500 wavered between modest gains and losses for much of the day as the gains for tech stocks jousted with the more prevalent losses elsewhere, before it turned lower in the last half hour of trading. It ended down 20.02 points at 2,848.42. The Dow Jones industrial average sank 218.45 points, or 0.9%, to 23,664.64. The Nasdaq, which is full of tech stocks, rose 45.27, or 0.5%, to 8,854.39.
A report Wednesday morning showed private U.S. employers eliminated an astonishing 20.2 million jobs last month. It sets a dour stage for Friday’s more comprehensive monthly jobs report from the U.S. government. Across the Atlantic, the European Union said Wednesday that it’s bracing for a “recession of historic proportions” amid restrictions meant to slow the spread of the virus.
Financial stocks weighed particularly heavy on the market, with JPMorgan Chase falling 1.9% and Wells Fargo losing 2.7%. Banks have been some of the hardest-hit stocks this year, largely on worries that all the job losses caused by the recession will saddle them with mountains of bad loans.
Energy stocks were also down after oil prices gave up some of their gains from earlier in the week. Benchmark U.S. crude oil fell 57 cents, or 2.3%, to $23.99 a barrel Wednesday. Brent crude oil, the international standard, fell $1.25 to $29.72 a barrel. That helped drag Chevron down 3.1% and Exxon Mobil down 1.9%.
But helping to counterweight that was the gain in tech stocks, which are able prop up the market because of their massive size. Microsoft and Apple alone make up 11% of the S&P 500 by market value, giving their movements great sway on the index. Each rose 1%.
After being down as much as 23% for the year on worries about the pandemic’s economic hit, tech stocks in the S&P 500 have erased all their losses and are now up 0.4% for 2020.
The S&P 500 has more than halved its earlier loss of 34%, which stretched from February into late March. It began its recovery after the Federal Reserve and U.S. government pledged massive amounts of aid for the economy.
Many analysts are skeptical about the rally, calling it overdone given uncertainty about how long the recession will last. And as Wednesday’s reports demonstrated, the damage looks to be the worst in many decades.
Investors recently have been focusing on the possibility that the economy will be in a less horrible place a few months from now, which would merit higher prices. China, where the pandemic began in December, has allowed factories and some other businesses to reopen. Some European governments are taking similar steps. California might allow some retailers to resume serving customers this week.
The yield on the 10-year Treasury climbed to 0.70% from 0.65% late Tuesday. That’s up from its record low of below 0.40% set in early March, but it’s still well below the roughly 1.90% it was yielding at the start of the year. Yields tend to fall when investors are downgrading their expectations for the economy and inflation.
The U.S. government is borrowing massive sums to pay for its response to the coronavirus, and the ballooning supply of Treasurys may be adding downward pressure on their prices. When a Treasury’s price falls, its yield rises.