Stocks are down on Wall Street in mid-afternoon trading on Thursday (US time) , extending the market’s pullback this week as optimism that Congress will deliver another round of stimulus for the economy wanes and new data show another weekly surge in the number of Americans seeking unemployment aid.
The S&P 500 was down 0.4 per cent. The benchmark index is now on track for its first weekly loss in three weeks. Technology, communications and health care stocks accounted for much of the selling, outweighing gains in banks, real estate and other sectors. The pullback follows a broad selloff in markets overseas as rising infections in Europe led governments in France and Britain to impose new measures to contain the coronavirus. Treasury yields were mixed, while the price for US crude oil also headed lower.
The Dow Jones Industrial Average was 0.2 per cent lower and the Nasdaq has dropped 0.8 per cent. ASX futures at 5.14am AEDT are pointing to a drop of 7 points, or 0.1 per cent, at the open.
Stocks have been mostly climbing this month, but have pulled back this week as talks between Democrats and Republicans in Washington over another economic stimulus package drag on, dimming investors’ hopes for a deal that can deliver more aid for the U.S. economy in the near term.
“The stimulus talk continues to be a little negative, and the virus outbreak in Europe that’s going to probably cause more shutdowns in various cities and countries, that’s a little bit of a negative, too,” said Scott Wren, senior global market strategist, Wells Fargo Investment Institute.
Still, Wren added, the market is expecting Washington will deliver another round of stimulus at some point, and continues to expect that various efforts to develop COVID-19 treatments and vaccines will pan out, eventually. If that wasn’t the case, the recent pullback in stocks would be much more severe, he said.
“The market is still pretty convinced we’re going to see good news on both fronts, it’s just not sure when,” Wren said.
The government’s latest weekly tally of unemployment claims underscores how the economy continues to be hobbled by the pandemic and recession that erupted seven months ago. The Labor Department said Thursday that the number of Americans seeking unemployment benefits rose last week to 898,000, a historically high number that exceeds analysts forecasts.
The report follows recent data that have signalled a slowdown in hiring. The economy is still roughly 10.7 million jobs short of recovering all the 22 million jobs that were lost when the pandemic struck in early spring.
The 10-year Treasury yield was down to 0.72 per cent from 0.73 per cent late Wednesday.
Investors continued to weigh the latest batch of earnings reports from major U.S. companies. Several reports so far have been better than expected, but the health crisis continues to cloud the outlook.
United Airlines slumped 4.7 per cent Thursday after reporting that its revenue plummeted over the summer. Morgan Stanley was up 1 per cent after the investment bank said its third-quarter profit jumped 25 per cent thanks to a surge in trading revenue and higher fees. Walgreens Boots Alliance rose 3.4 per cent after the drugstore chain’s latest quarterly results topped Wall Street’s forecasts.
Across the S&P 500, analysts are expecting companies to report another drop in profits for the summer from year-ago levels. But they’re forecasting the decline to moderate from the nearly 32 per cent plunge from the spring as the economy has shown signs of improvement.
A resurgence in coronavirus infections in Europe has also given investors cause to turn cautious. Fears are rising that Europe is running out of chances to control the new outbreak, as infections hit record daily highs in Germany, the Czech Republic, Italy and Poland. France slapped a 9 pm curfew on many of its biggest cities and Londoners face new travel restrictions as governments take increasingly tough actions.
The limits on public life are not as strict as the full lockdowns imposed during the spring, but will stunt or even reverse the economy’s recovery from recession, experts say.
European markets fell broadly after France imposed a curfew on many of its biggest cities and Londoners faced new travel restrictions. Germany’s DAX lost 2.5 per cent. The CAC 40 in France slid 2.1 per cent. The FTSE 100 in London fell 1.7 per cent.
Source: Thanks smh.com