U.S. stocks end higher as market volatility continues
Stocks eked out modest gains Thursday even as volatility continued to be the dominant force in Wall Street’s tumultuous September.
The Standard & Poor’s 500 index rose 0.3% after earlier swinging between a loss of 0.9% and a gain of 1.3%. The market notched widespread gains, though technology stocks powered much of the turnaround. Out of the S&P 500′s 11 sectors, only healthcare ended the day lower.
The market’s momentum has shifted with lightning speed recently, often changing direction by the hour. On Wednesday, the S&P 500 rose to a modest gain when trading began, only to end the day with a 2.4% slump. The benchmark index is now down 9.3% from its record set on Sept. 2 and on pace for its first monthly decline after a five-month rally.
The market’s turbulent run this month comes as investors worry about the upcoming election, concern over the sustainability of the economic recovery and doubts about the prospects for Congress delivering more economic aid for struggling Americans. Uncertainty over how soon drugmakers will be able to develop a coronavirus vaccine is also weighing on investors’ mood.
The S&P 500 rose 9.67 points to 3,246.59. The Dow Jones industrial average gained 52.31 points, or 0.2%, to 26,815.44. The Nasdaq composite added 39.28 points, or 0.4%, to 10,672.27. The Russell 2000 index of small-company stocks inched up 0.36 point, or less than 0.1%, to 1,451.82.
Thursday’s headline report showed that 870,000 workers filed for unemployment claims last week, a worse number than economists expected. The numbers come as investors are increasingly resigned to Congress not delivering more support for the economy, as many had been expecting, after extra unemployment benefits and other stimulus expired recently.
Stocks got a boost from a report showing that sales of new homes accelerated last month, contrary to economists’ expectations for a slight slowdown. Home builders closed higher, led by a 7.2% gain for Beazer Homes USA.
Trading has been erratic on Wall Street this month, resulting in a sharp pullback for stocks. Several reasons are behind the abrupt tumble, highlighted by worries that stocks simply grew too expensive during their record-setting run through the spring and summer.
Among other concerns weighing on markets are the upcoming U.S. elections, particularly after President Trump’s refusal Wednesday to commit to a peaceful transition of power if he lost, and rising tensions between the United States and China.
Layered on top of it all is the still-raging COVID-19 pandemic and the threat that worsening counts around the world could lead to more business restrictions.
It’s a stark shift from late March into early this month, when the S&P 500 soared 60% and more than recovered all its earlier losses on worries about the pandemic-caused recession. Still in investors’ favor is unprecedented support from the Federal Reserve, which is holding short-term interest rates near zero and buying all kinds of bonds to support markets.
But Fed Chairman Jerome H. Powell has said several times in testimony on Capitol Hill this week that the central bank can’t prop up the economy by itself and that the recovery probably needs more help from Congress. He was due to testify again Thursday.
Paralyzing partisanship has prevented a congressional renewal of aid, and the vacancy on the Supreme Court caused by the recent death of Justice Ruth Bader Ginsburg has deepened the divide.
Much of the market’s weakness this month has centered on Big Tech, whose prices, critics said, exploded too high even after accounting for the companies’ strong growth.
Amazon, Apple and others have seen their revenue continue to rise through the pandemic, as work-from-home and other trends that benefit them take deeper hold. But Amazon shares were up more than 90% for the year just a few weeks ago, for example, and they tumbled in recent weeks.
On Thursday, Amazon closed 0.7% higher after bouncing between gains and losses. Other Big Tech stocks also eked out gains. Apple rose 1%, Microsoft added 1.3% and Google’s parent company picked up 1%.
Moves for such stocks have an outsized effect on broad indexes such as the S&P 500 because they’re the largest companies in the market by value.
The yield on the 10-year Treasury held steady at 0.67%.
In Europe, Germany’s DAX fell 0.3% and France’s CAC 40 fell 0.8%. The FTSE 100 in London slid 1.3%.
In Asia, Japan’s Nikkei 225 fell 1.1%, South Korea’s Kospi tumbled 2.6% and Hong Kong’s Hang Seng dropped 1.8%. Stocks in Shanghai lost 1.7%.
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