Advertisement

S&P 500 has biggest loss in nearly four weeks as tech stumbles

A Wall Street sign is seen next to the New York Stock Exchange in New York City.
A Wall Street sign is seen next to the New York Stock Exchange in New York City.
(Richard Drew / Associated Press)

Slumping stocks across most of Wall Street sent the Standard & Poor’s 500 index to its worst loss in nearly four weeks Thursday, undercut by a report showing layoffs are picking up across the country along with coronavirus counts.

Technology stocks had the sharpest drops after a better-than-expected profit report from Microsoft failed to satisfy investors expecting even more from the company, whose stock has largely defied gravity and the pandemic this year. The sector helped drag the S&P 500 down 40.36 points, or 1.2%, to 3,235.66 for its first loss in five days.

The Dow Jones industrial average lost 353.51 points, or 1.3%, to 26,652.33. The Nasdaq composite fell 244.71 points, or 2.3%, to 10,461.42.

Other stock indexes around the world were mixed, while uncertainty across markets helped gold touch its highest price in nearly nine years.

Advertisement

Thursday’s headline economic report was one that has taken on much more importance for markets through the pandemic: the weekly tally of workers applying for unemployment benefits. Last week, the count rose by 109,000 to a little more than 1.4 million.

It breaks a stretch of 15 straight weeks of improvements, a streak that had raised investor optimism that the recession could prove to be shorter than expected. It comes as coronavirus counts continue to rise across much of the Sun Belt, leading to more business closures.

Among the market’s heaviest weights was Microsoft, which fell 4.3% despite reporting a bigger quarterly profit for the spring than Wall Street expected. It’s a relatively rare stumble for the giant, which has cruised to records recently on expectations that it can continue to grow whether the economy is locked down or not.

But with the rise come greater expectations, and analysts pointed to a 47% growth rate reported for Microsoft’s Azure cloud business during the quarter. That fell short of analysts’ forecast.

Advertisement

Because Microsoft is one of the largest U.S. stocks by market value, its movements have an outsized effect on indexes such as the S&P 500.

Apple, the other titan that trades off with Microsoft for the title of most valuable U.S. stock, was down 4.6%. Other highflying tech-oriented giants also stumbled, including a 3.7% drop for Amazon. Those three stocks alone accounted for more than half of the S&P 500’s loss.

Smaller stocks held up better, and the Russell 2000 index of small-cap stocks was virtually unchanged. It added 0.06 points to 1,490.20. Even within the S&P 500, 44% of stocks rose.

On the winning end were several big companies that reported more encouraging trends in their business during the spring than Wall Street expected.

Advertisement

Whirlpool jumped 8% for the biggest gain in the S&P 500 after the appliance maker reported a profit for the spring that was more than double what analysts expected. It also said that it saw demand recover in markets around the world in June, while saying it doesn’t expect sales over the course of 2020 to drop as much as it had earlier forecast.

Twitter rose 4.1% after its quarterly report showed the strongest user growth in its history.

Investors are also hoping that Congress can agree on more aid for out-of-work Americans just as an extra $600 in weekly unemployment benefits is set to expire.

Republicans in the Senate were set to unveil their proposals for a $1-trillion COVID-19 rescue package Thursday morning, but that got delayed. Finding a compromise with the Democratic-controlled House of Representatives could also be more difficult than it was in March, when Congress produced a $2-trillion rescue package.

Advertisement

Thursday’s trading is a microcosm of the volatile moves that have dominated the market in recent weeks.

Helping to lift stocks have been several reports on the economy and corporate profits that showed improvements from the spring and were better than expected. That’s layered on top of massive aid for the economy promised by the Federal Reserve, including nearly zero interest rates.

But weighing markets down is a long list of challenges beyond the worsening coronavirus counts across much of the United States. They include worries about rising tensions between the United States and China, the world’s largest economies, and the effect of the upcoming U.S. elections.

The yield on the 10-year Treasury dipped to 0.58% from 0.59% late Wednesday. It tends to move with investors’ expectations for the economy and inflation.

Advertisement

Gold for delivery in August rose $24.90 to $1,890.00 an ounce. Benchmark U.S. crude fell 83 cents to $41.07 a barrel. Brent crude oil for September delivery fell 98 cents to $43.31 a barrel.

Major European stock indexes were close to flat, while Asian markets were down modestly.


Advertisement