Stocks fall as virus worries force big rally to take a pause
Worries about the worsening pandemic pushed Wall Street to tap the brakes Tuesday on its big November rally, which had vaulted stocks back to record heights.
Treasury yields also dipped after a report showed U.S. shoppers spent less at retailers last month than economists expected. The numbers underscore how the COVID-19 pandemic is worsening and threatens to drag the economy lower, at least in the near term.
Stocks that stormed higher this month on hopes that a vaccine or two may get the global economy back to normal next year receded amid the worries.
The Standard & Poor’s 500 index fell 17.38 points, or 0.5%, from its record to close at 3,609.53. It was the first loss for the index in three days.
The Dow Jones industrial average also fell from a record, down 167.09 points, or 0.6%, to 29,783.35. The Nasdaq composite slipped 24.79 points, or 0.2%, to 11,899.34.
Stocks in the pharmacy business were among the biggest drags on the market after Amazon targeted them as the latest industry it’s trying to upend. The retailing behemoth opened an online pharmacy Tuesday that allows customers to have prescriptions delivered to their door in a couple of days.
CVS Health fell 8.6%, Walgreens Boots Alliance dropped 9.6% and Rite-Aid lost 16.3%. Amazon, meanwhile, ticked up 0.1%.
On the winning side was Tesla, which rose 8.2% after an announcement that it will join the S&P 500 next month. The index is hugely influential, and nearly $4.6 trillion at the end of last year was in funds that mimic the S&P 500.
The electric-vehicle company had already soared 388.8% in 2020 before Monday evening’s index announcement. With a total market value rivaling Johnson & Johnson’s and Visa’s, it’s set to become one of the biggest stocks in the S&P 500.
The broader stock market slowed Tuesday, though, and the majority of stocks in the S&P 500 were lower.
Boston Scientific dropped 7.9% for one of the largest losses in the index after it issued a voluntary recall for its Lotus Edge aortic valve system. Analysts said problems with its delivery system essentially mean an end to what was once a promising business.
Sales at U.S. retailers rose 0.3% last month, a sharp slowdown from September’s 1.6% growth. The figure also fell short of economists’ expectations for 0.5% growth.
The shortfall may be partly because laid-off workers are no longer getting extra unemployment benefits from the U.S. government after the expiration of several financial-support programs from Congress. Democrats and Republicans in Washington have talked about renewing some of the programs, but progress has been painfully slow amid deep partisanship in Washington.
That’s layering on top of the accelerating pandemic, which is pushing governments across the United States and Europe to bring back varying degrees of restrictions on daily life in hopes of slowing the spread of the virus. Health experts are warning of a bleak winter on the way.
Federal Reserve Chairman Jerome H. Powell said Tuesday the surge could raise fear enough to discourage consumers from spending and hurt the economy.
“The concern is that people will lose confidence in efforts to control the pandemic, and ... we’re seeing signs of that already,” Powell said in an online discussion with the Bay Area Council, a San Francisco business group.
That’s all helped dilute some of the optimism that’s rushed through markets since early last week. Companies have released encouraging early results for a couple of potential COVID-19 vaccines, which is raising hopes that the economy can get back to normal and stocks beaten down during the pandemic can roar back to life.
Even with Tuesday’s decline, the S&P 500 is still up 10.4% for November so far. That’s better than any monthly performance for the index since April, when stocks were exploding higher after their pandemic-induced plunge.
The yield on the 10-year Treasury fell to 0.87% from 0.89% late Monday.
In Europe, Germany’s DAX was close to flat, and France’s CAC 40 reversed an earlier loss to rise 0.2%. The FTSE 100 in London fell 0.9%.
In Asia, stocks were mixed. Japan’s Nikkei 225 rose 0.4%, and Hong Kong’s Hang Seng inched up 0.1%. South Korea’s Kospi slipped 0.2%, and stocks in Shanghai lost 0.2%.
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