Stocks end nearly flat as coronavirus jitters continue
Major U.S. stock indexes ended nearly flat Wednesday after an early rally powered by strong gains in technology companies faded in the final minutes of trading.
The wobbly finish left the benchmark Standard & Poor’s 500 index with a 0.1% loss. Bond prices rose, pulling yields down.
Investors assessed quarterly reports from big companies, including solid results from General Electric and Apple. The iPhone maker’s shares climbed to an all-time high. After the close of regular trading, Microsoft reported quarterly results that topped Wall Street estimates.
Tesla also reported strong quarterly results after the closing bell, which sent its shares up 11% in after-hours trading. The electric-vehicle maker’s stock had already closed at an all-time high during the regular trading session.
Stocks barely budged after the Federal Reserve announced it is leaving its benchmark interest rate unchanged at a low level. The widely expected move reflects the central bank’s mostly positive view of the U.S. economy.
Fed policymakers “seem to have gotten the porridge temperature just about right,” said Tom Martin, senior portfolio manager with Globalt Investments. “Inflation isn’t budging one way or the other. Same thing with unemployment, same thing with wage growth.”
The S&P 500 index fell 2.84 points, or 0.1%, to 3,273.40. The Dow Jones industrial average edged up 11.60 points, or less than 0.1%, to 28,734.45. The Nasdaq rose 5.48 points, or 0.1%, to 9,275.16. The Russell 2000 index of smaller-company stocks slid 9.09 points, or 0.5%, to 1,649.22.
The Dow, S&P and Nasdaq are on track to end January with gains.
Bond prices rose. The yield on the 10-year Treasury note slid to 1.58% from 1.64%.
Despite a rally Tuesday, stocks have mostly slipped this week amid investor jitters over the outbreak of a new virus in China. The virus, which has infected more than 6,000 people in mainland China and abroad, remains a potential threat to the global economy.
Speaking to reporters Wednesday, Federal Reserve Chairman Jerome Powell acknowledged that there’s a risk the outbreak could slow the global economy.
Turning to interest rates, the central bank said it would hold short-term rates in a range of 1.5% to 1.75%, far below levels that were typical during previous expansions. Powell and other Fed officials have indicated that they see that range as low enough to support faster growth and hiring.
Last year, the Fed cut its benchmark interest rate three times after having raised it four times in 2018. Powell credits those rate cuts with revitalizing the housing market, which had stumbled early last year, and offsetting some of the drag from President Trump’s trade war with China.
Wednesday’s declines in communication services, energy and healthcare stocks outweighed gains by the technology, industrial and utilities sectors.
A report that Americans pulled back on signing contracts to buy homes last month dragged down home-builder stocks. PulteGroup fell 1.8% and Hovnanian Enterprises dropped 3.7%.
Apple rose 2.1% after a strong holiday season helped propel profits beyond Wall Street forecasts. The iPhone maker’s surprisingly good report marks a turnaround from a year ago when sales of its marquee product appeared to be sliding. The company is also seeing gains in sales of smartwatches, digital services and wireless earbuds.
General Electric surged 10.3% after a strong showing from its aviation business pushed profits above expectations.
Norfolk Southern climbed 4.9% after the railroad reported surprisingly good fourth-quarter profits following cost cuts. The railroad industry has been experiencing weak demand for freight hauling, and the company is trying to operate on a tighter schedule and move more freight with fewer people.
Union Pacific rose 1.2% and CSX climbed 1.7%.
L Brands surged 12.9% following reports that the owner of Bath & Body Works and Victoria’s Secret could change leadership and sell some of its parts. The Wall Street Journal reported that Leslie Wexner, who has served as chief executive for more than five decades, is in talks to step down. It also said the company is considering a full or partial sale of its lingerie business.
Wall Street’s busy week of company earnings reports continues Thursday, when Coca-Cola, UPS, Amazon and Visa are scheduled to release results. Caterpillar and Exxon Mobil will report results Friday.
Benchmark crude oil fell 15 cents to settle at $53.33 a barrel. Brent crude oil, the international standard, rose 30 cents to close at $59.81 a barrel. Wholesale gasoline rose 3 cents to $1.53 a gallon. Heating oil fell 2 cents to $1.70 a gallon. Natural gas fell 6 cents to $1.87 per 1,000 cubic feet.
Gold rose 60 cents to $1,570.40 an ounce. Silver rose 5 cents to $17.45 an ounce. Copper fell 3 cents to $2.55 a pound.
European markets finished higher. Asian markets were mixed. Hong Kong’s Hang Seng fell 2.8% after its markets reopened from Lunar New Year holidays, while other Chinese markets remained closed.
