U.S. Stocks Drop as Jobless Claims Remain Elevated
July 09 2020 - 2:37PM
Dow Jones News
By Caitlin Ostroff and Karen Langley
U.S. stocks dropped Thursday as investors continued to back away
from bets on a smooth reopening from the coronavirus shutdowns.
Fresh data showed that initial unemployment claims in the U.S.
remained elevated, and the number of confirmed new Covid-19 cases
in the U.S. hit a new single-day high Wednesday.
After surging more than 40% from its March low, the S&P 500
pulled back Thursday, dropping 0.8%. Only its technology and
consumer discretionary sectors were in the green. The Dow Jones
Industrial Average fell about 372 points, or 1.4%, recovering after
briefly being down more than 500 points.
"It's not surprising, depending on some of the headlines that
scroll through at this time, you're going to have what we call
basically a choppy market," said Jack Janasiewicz, portfolio
manager at Natixis Investment Managers Solutions. "It's going to be
uneven. You're going to have fits and starts. The market seems to
focus on any sort of bad coronavirus news."
Investors continued to favor many of the megacap growth stocks
that have outperformed throughout the market turmoil. Gains by
Microsoft, Apple and Amazon helped the Nasdaq Composite edge up
less than 0.1%, putting it on track for another record close. The
tech-heavy gauge has established a wide le ad over other major
indexes in 2020.
Analysts have attributed the stock market's resurgence from its
lows in part to broad fiscal and monetary stimulus efforts. But
they continue to parse new data that could reveal the strength of
economic recovery and the progression of the coronavirus
pandemic.
Figures Thursday showed initial unemployment claims edged down
last week to 1.3 million, extending a trend of gradual declines
from a peak in March. Last week's level remained well above the
highest week on record before this year.
As reopenings from the coronavirus shutdowns continue, the count
of confirmed new Covid-19 cases in the U.S. reached a new
single-day high of 60,000 on Wednesday, according to data from
Johns Hopkins University.
Shares of companies whose prospects are tied to the economic
reopening came under pressure. United Airlines Holdings, American
Airlines Group and Royal Caribbean Cruises each lost at least
4%.
With a flurry of new information related to the coronavirus and
the approach of the presidential election later this year, many
investors expect market volatility to continue.
"The cards are all still very much up in the air for the U.S.
economy and the U.S. stock market," said Sarah Henry, a portfolio
manager at Logan Capital Management who covers consumer
sectors.
Among individual stocks, shares of Walgreens Boots Alliance
dropped 8.7% after the drugstore chain reported a quarterly loss
and cited reduced traffic in U.K. stores. Bed Bath & Beyond
shares lost 25% after the home-goods chain said it would
permanently close about 200 stores.
Overseas, China's stock market zoomed higher for the eighth day
in a row, leading Asian indexes higher, while stocks in the rest of
the world wavered.
The Shanghai Composite rose 1.4% Thursday, extending a winning
streak that is now the longest since January 2018. Japan's Nikkei
225 Index was up 0.4% and Hong Kong's Hang Seng rose 0.3%.
"The day traders are actually a sizable part of the market,"
said Altaf Kassam, head of investment strategy for State Street
Global Advisors in Europe. He said the traders were looking at
signals of the government's support for the economy: "If anywhere
has had a V-shaped recovery, it's China."
The yield on the 10-year U.S. Treasury dropped to 0.600%, from
0.652% Wednesday. Yields fall as bond prices rise.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Karen
Langley at karen.langley@wsj.com
(END) Dow Jones Newswires
July 09, 2020 14:22 ET (18:22 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.