Stocks on Wall Street shook off an early stumble and scratched out small gains Monday as the market’s momentum slows following its best month in decades.
The Standard & Poor’s 500 index ended with a gain of 0.4%, narrowly avoiding what would have been its first three-day losing streak in nearly two months. The Dow Jones industrial average eked out a 0.1% gain, and the Nasdaq rose 1.2%.
When U.S. trading opened, the market appeared set for a uniformly depressing day. The S&P 500 dived 1.2% almost immediately, with airlines sinking particularly sharply after investor Warren Buffett said he’d dumped all his shares in the four biggest U.S. carriers. An escalation of tensions between the White House and China over the origins and handling of the COVID-19 pandemic was also weighing on markets around the world.
But big tech stocks, whose momentum has been strong in recent years, continued to rally. Energy stocks also helped steady the market after the price of oil pulled a bit further from the record lows set late last month.
The S&P 500 rose 12.03 points to 2,842.74. The Dow advanced 26.07 points to 23,749.76, and the Nasdaq gained 105.77 points to 8,710.71.
“I wouldn’t hold out a lot of hope for seasonal strength,” said Sam Stovall, chief investment strategist at CFRA. “This is the six-month period in which the market tends to trace out the design on Charlie Brown’s shirt.”
Many professional investors have been skeptical of the market’s huge rally since late March given how much devastation is rolling through the economy. Uncertainty is extremely high about how long the recession will last after businesses around the world shut down in hopes of slowing the spread of the coronavirus. Even some of Wall Street’s optimists have said a pullback for the S&P 500 is overdue.
Strategists at Morgan Stanley called such a pullback, which could reach 10%, “a necessary pause that refreshes.” While acknowledging the severe recession that everyone sees gripping the world, they say stocks can still resume their climb due largely to “seemingly unlimited central bank support, unprecedented fiscal stimulus” and a possible deceleration in the shocking numbers coming in on the economy.
Monday’s biggest losses were concentrated in airlines, after Buffett’s Berkshire Hathaway disclosed that it sold all its stakes in American Airlines Group, Delta Air Lines, Southwest Airlines and United Airlines. Buffett is one of the stock market’s most famous bargain hunters, and investors around the world parse every clue he gives about investing. Over the weekend, he said he’d made a mistake in how he valued airlines.
All four of the airlines slid 5.1% or more Monday.
Also potentially weighing on markets was Buffett saying that he’s hanging on to his cash and hasn’t made any big deals recently because he hasn’t seen any on attractive terms.
Tech stocks in the S&P 500 rose 1.4%, though, and they make up roughly a quarter of the index by market value, which gives them particularly big sway. Microsoft, the biggest company in the index, climbed 2.4%.
Energy stocks jumped 3.7% after U.S. crude oil for delivery in June rose 61 cents to $20.39 per barrel. It’s been generally climbing since dropping to $6.50 per barrel late last month, but worries about collapsing demand and swelling supplies mean it’s still way below the roughly $60 level where it started the year.
Brent crude, the international standard, rose 76 cents to $27.20 per barrel.
Earlier in the day, markets in Asia and Europe fell to losses after U.S.-China tensions worsened.
Criticized over his handling of the coronavirus crisis, President Trump has tried to shift the blame to China. Beijing has repeatedly pushed back on U.S. accusations that the outbreak was China’s fault.
The antagonisms threaten the truce in the U.S.-China trade war, which was struck just before China began shutting much of its economy down in late January to fight the pandemic.
“We’re still battling with the notions of how and when we’ll bottom and how things will be different at the end” of the pandemic, said Keith Buchanan, senior portfolio manager at Globalt. Reintroducing a tariff dispute just “adds another worrying point for the market,” he said.
Stocks in Hong Kong dropped 4.2%, while South Korea’s market lost 2.7%. In Europe, France’s CAC 40 fell 4.2%, Germany’s DAX lost 3.6% and Britain’s FTSE 100 fell 0.2%.
Monday was the first opportunity for France, South Korea and other markets to catch up to the rest of the world, following their closures for holidays last week. Stock markets in Tokyo and Shanghai were among those closed for holidays Monday.