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Stocks fall on Wall Street as global rally fades, led by tech

The words "Wall Street" appear on a building facade. The rise of COVID-19 cases across the U.S. has pushed markets lower.
Heavy losses for travel-related stocks helped pull the S&P 500 to its first loss in three days.
(Associated Press)

Wall Street stumbled Thursday after a report showed layoffs continue to sweep the country at a stubbornly steady pace, one of several mixed reports to highlight the uncertain path ahead for the economy.

The Standard & Poor’s 500 index slipped 0.3%, following up on declines across Europe and Asia, as a worldwide rally faded. Stocks in China fell particularly sharply after a report showed shoppers there are slow to spend even though its economy has returned to growth. Treasury yields also lost ground in a sign of increased caution.

Heavy losses for travel-related stocks helped pull the S&P 500 to its first loss in three days, down 10.99 points to 3,215.57. 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 heavily because they’re the largest stocks in the index. They also sent the Nasdaq composite, which set a record last week, to a larger loss than other indexes. It fell 76.66 points, or 0.7%, to 10,473.83. The Dow Jones industrial average lost 135.39 points, or 0.5%, to 26,734.71.

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It marks the latest ebb for markets, which have mostly been churning up and down for a little more than a month. Stocks have been pushed higher by 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. It’s now 5% below its peak.

But pulling markets lower has been the relentless rise of coronavirus cases 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 because of a surge in cases, and the worry is that 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 weekly unemployment benefits provided by the federal government are set to expire this month.

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But other reports painted a less discouraging picture. Sales at stores and online retailers grew more strongly last month than economists expected, particularly for clothing. It’s the second straight month of growth for retail sales after April’s plummet.

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 1.2%. 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.

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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 2.5% after it reported much stronger profit for the latest quarter than analysts expected. Hartford Financial Services Group jumped 4.7%, the largest gain in the S&P 500, 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 2.7% 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 0.1%, 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 after a 15% surge in less than two weeks.

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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 45 cents to settle at $40.75 a barrel. Brent crude, the international standard, fell 42 cents to $43.37 a barrel.


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