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Stocks fall on Wall Street as coronavirus spreads in Europe

The Wall Street street sign is framed by a giant American flag hanging on the New York Stock Exchange, in a Monday, Sept. 21, 2020 file photo. Stocks are opening higher on Wall Street, recovering after their first four-week losing streak in more than a year. A burst of corporate deals helped give investors confidence to put money back in the market, and the S&P 500 rose 1.4% in the early going Monday, Sept. 28, 2020. Photo: AP Photo/Mary Altaffer, File. The Wall Street street sign is framed by a giant American flag hanging on the New York Stock Exchange, in a Monday, Sept. 21, 2020 file photo. Stocks are opening higher on Wall Street, recovering after their first four-week losing streak in more than a year. A burst of corporate deals helped give investors confidence to put money back in the market, and the S&P 500 rose 1.4% in the early going Monday, Sept. 28, 2020.

Associated Press
Created: October 15, 2020 03:58 PM

U.S. stock indexes erased much of their early losses and closed modestly lower Thursday, extending the S&P 500's losing streak to a third day.

The S&P 500 fell 0.2% after having been down 1.4%. Technology, health care and communications stocks accounted for most of the selling, outweighing slight gains in banks and elsewhere in the market.

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Wall Street has turned cautious this week amid a confluence of worrisome trends for the economy, which is still hampered by the pandemic. Coronavirus infections are rising in Europe, prompting governments in France and Britain to impose new measures to contain the outbreak. European stock indexes fell broadly Thursday as traders pulled money out of riskier investments.

In the U.S., investor optimism that the Trump administration and Congress will soon reach a deal on another round of stimulus for the economy has waned. And the government said Thursday that the number of Americans seeking unemployment aid increased more than expected last week.

“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 S&P 500 fell 5.33 points to 3,483.34. The Dow Jones Industrial Average dropped 19.80 points, or 0.1%, to 28,494.20. It had been down 332 points in the early going. The Nasdaq composite gave up 54.86 points, or 0.5%, to 11,713.87.

Smaller company stocks fared better than the broader market. The Russell 2000 index of small-cap stocks bounced back from an early slide and rose 17.23 points, or 1.1%, to 1,638.88.

Stocks have been mostly climbing this month, but have pulled back this week as ongoing talks between Democrats and Republicans on an economic stimulus package have failed to deliver results. Investors have been hoping that Washington would provide more financial support for the economy since July, when a $600-a-week extra benefit for the unemployed expired.

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 signaled 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 held steady at 0.73%.

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 3.8% Thursday after reporting that its revenue plummeted over the summer. Morgan Stanley rose 1.3% after the investment bank said its third-quarter profit jumped 25%, thanks to a surge in trading revenue and higher fees. Walgreens Boots Alliance gained 4.8% 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% 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 p.m. 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%. The CAC 40 in France slid 2.1%. The FTSE 100 in London fell 1.7%.

In Asia, the Shanghai Composite Index lost 0.3% and the Nikkei 225 in Tokyo sank 0.7%. The Hang Seng in Hong Kong lost 2.1%.

The Kospi in Seoul shed 0.8% despite a strong market debut by the company that manages popular South Korean boy band BTS. The group faces criticism by Chinese internet users after its leader thanked Korean War veterans for their sacrifices.

Big Hit Entertainment Ltd.’s share price doubled by midday but ended the day close to its opening. Its market value after an initial public offering that raised more than $800 million was about $7.5 billion.


(Copyright 2020 by The Associated Press. All Rights Reserved.)

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