Dow Drops 70, Nasdaq Closes Up 67
U.S. stock indexes closed mostly lower Thursday following more evidence that the pandemic is tightening its grip on the economy while Congress remains in a stalemate over how to do something about it.
The S&P 500 slipped 0.1% after flipping between gains and losses in the early going. The index is within 1% of its all-time high set on Tuesday. Some 60% of the companies in the S&P 500 fell, led by declines in industrial and communication services stocks. Those losses outweighed gains in energy, technology and financial companies.
Treasury yields fell following a report that showed 853,000 U.S. workers applied for unemployment benefits last week. That was more than economists expected and an acceleration from the prior week. It’s also the latest reminder that the pandemic is doing more damage to the economy in the near term, even if prospects are rising that a COVID-19 vaccine will get the economy healthy in the longer term.
Economists and investors have been imploring Congress to deliver more financial support in the meantime, to help carry the economy until it can stand on its own. After months of partisan bickering and no progress on Capitol Hill, momentum seemed to swing higher recently for a deal, but talks are still mired in deep uncertainty.
On Thursday, Treasury Secretary Steven Mnuchin reported headway in talks over President Donald Trump’s latest $900 billion-plus plan. But, Democrats and Republicans are still at odds over the size and scope of any deal.
“There’s nothing really new there, except now you’ve got some softening economic data,” said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute
The S&P 500 fell 4.72 points to 3,668.10. The Dow Jones Industrial Average dropped 69.55 points, or 0.2%, to 29,999.26. The Nasdaq composite rose 66.85 points, or 0.5%, to 12,405.81.
Small company stocks continued to do better than the broader market. The Russell 2000 climbed 20.56, or 1.1%, to 1,922.70, a record high.
Stocks have been climbing to new heights in recent weeks on hopes that the distribution of one or more coronvairus vaccines will put the pandemic-ravaged economy on the path to recovery. But Thursday’s discouraging report on joblessness adds to worries that the economy is in for more pain, especially in the wake of a surge in new coronavirus cases in many parts of the U.S.
The market sometimes rallies following discouraging economic data on the theory that the bad news might pressure Congress to deliver more aid for the economy. But in the face of uncertainty, though, trading was wobbly Thursday.
“In the broader market, people are waiting to see what happens with a stimulus package,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
Energy stocks, which often move with expectations for the economy’s strength, notched the biggest gain among the 11 sectors that make up the S&P 500, at 2.9%. They rose with crude oil prices.
Starbucks gained 5% after the coffee chain backed its profit forecast for this fiscal year and said it expects “outsized growth” in the following one.
But industrial companies, whose stocks have been been tracking hopes for the economy, fell. United Parcel Service declined 2.9%.
The choppiness in the market is not unheard of, considering the stellar gains for stocks in November and uncertainty still lingering over the timing of vaccine distribution as virus cases rise, Christopher said.
“It’s not unusual to see some consolidation after a strong month like that,” he said.
Elsewhere in the market, shares of Airbnb soared 112.8% on their first day of trading. Interest has been high for the home sharing company, which has seen its business recover faster through the pandemic than hotels.
A day earlier, another San Francisco-based company, DoorDash, soared nearly 86% in the first day of trading for its stock.
In Europe, stock markets were subdued even though the European Central Bank delivered another half-trillion of euros ($600 billion) in stimulus for the economy. Coronavirus counts are also spiraling higher on the continent, and its central bank is promising to buy more bonds to push the economy along. Asian markets made modest moves.
The yield on the 10-year Treasury fell to 0.90% from 0.93% late Wednesday. A government report released Thursday morning showed that inflation was slightly stronger last month than economists expected, though it remains modest.
AP Business Writer Elaine Kurtenbach contributed.