Wall Street's rally stalls amid discouraging rise in layoffs
NEW YORK (AP) — Stocks are stalling on Wall Street Thursday, undercut by a discouraging report showing that layoffs are picking up across the country with coronavirus counts.
The S&P 500 was 0.2% lower in morning trading, easing off a rally that had sent it higher for four straight days. Other stock indexes around the world were mixed, while all the uncertainty dominating markets helped gold tick up again to its highest price in nearly nine years.
The Dow Jones Industrial Average was down 147 points, or 0.5%, at 26,858, as of 11:05 a.m. Eastern time, and the Nasdaq composite was down 0.3%. Despite the modest declines for the major U.S. indexes, most stocks in the S&P 500 were higher, led by several that reported stronger profits for the spring than Wall Street expected.
The day’s headline economic report was one that has taken on much more importance for markets through the pandemic: the weekly tally of workers filing for unemployment benefits. Last week, the total rose by 109,000 to a little more than 1.4 million.
It breaks a stretch of 15 straight weeks of improvements, a streak that had raised investor optimism that the recession could prove to be shorter than expected. It comes as coronavirus counts continue to rise across much of the Sun Belt, leading to more business closures.
On the opposite end, though, were several reports from major companies like Twitter and Whirlpool showing that their businesses held up better during the spring than Wall Street expected. Also buoying the market are hopes that Congress can agree on more aid for out-of-work Americans just as an extra $600 in weekly unemployment benefits is set to expire.
Republicans in the Senate are set to unveil their proposals for a $1 trillion COVID-19 rescue package, though finding a compromise with the Democratic-controlled House of Representatives could be more difficult than in March, when Congress produced a $2 trillion rescue package.
PulteGroup jumped 9.6% for the biggest gain in the S&P 500 after the home builder said it made a bigger profit during the spring than Wall Street expected. Other stronger-than-expected quarterly reports also helped to lift Whirlpool 9.2% and Twitter 6.6%. Tesla rose 0.9% following its better-than-expected report.
On the losing end of the stock market were energy stocks, which slumped with the price of oil.
Microsoft fell 1.8% despite reporting a bigger quarterly profit than Wall Street expected. Analysts pointed to a 47% growth rate for its Azure cloud business, which was not as big as analysts had forecast.
Thursday’s trading is a microcosm of the volatile moves that have dominated the market in recent weeks.
Helping to lift stocks have been several reports on the economy and corporate profits that showed improvements from the spring and were better than expected. That’s layered on top of massive aid for the economy promised by the Federal Reserve, including nearly zero interest rates.
But weighing markets down is a long list of challenges beyond the worsening coronavirus counts across much of the United States. They include worries about rising tensions between the United States and China, the world’s largest economies, and the effect of the upcoming U.S. elections.
The yield on the 10-year Treasury dipped to 0.58% from 0.59% late Wednesday. Gold rose 1.1% to $1,884.80 per ounce and is close to its highest level since September 2011, which was shortly after it set its record above $1,900.
Benchmark U.S. crude slipped 0.4% to $41.73 per barrel. Brent crude, the international standard, lost 0.8% to $43.94.
In Europe, stock indexes were mixed. Germany’s DAX index was virtually flat, while France’s CAC 40 slipped 0.1%. Britain’s FTSE 100 gained 0.1%.
Earlier, in Asia, the Kospi in Seoul lost 0.6% after South Korea reported that its economy contracted 3.3% in April-June. Hong Kong’s Hang Seng gained 0.5%, and stocks in Shanghai dipped 0.2%.