Stocks Finish Mixed, Halting This Week's Rally
June 04 2020 - 4:54PM
Dow Jones News
By Caitlin McCabe and Anna Hirtenstein
U.S. stocks were mixed Thursday in a choppy trading session as
investors weighed their optimism about the reopening of the economy
against fresh data that showed the pandemic's continued toll.
The Dow Jones Industrial Average swung between gains and losses
throughout most of the session, before rising 12 points, or less
than 0.1%, as of the 4 p.m. ET close of trading. Companies from
Microsoft to UnitedHealth Group to Nike weighed on the blue-chip
index, while a rally in heavyweight Boeing helped mitigate
losses.
The S&P 500 dropped 0.3%, snapping a four-session winning
streak. The Nasdaq Composite fell 0.7%, pulled down by declines in
shares of mega-cap technology companies.
Stocks have rallied for much of the week, despite the social
unrest and widespread protests that have gripped the country since
George Floyd, a black man, died after being restrained by
Minneapolis police. Traders had instead focused on promising signs
of an economic recovery, as well as optimism that global economies
could see more stimulus measures.
Yet Thursday's data on job losses and trade paused that rally,
giving investors the chance to take profits after a strong rally in
recent weeks.
"There's a little bit of [questioning] of how far can this
[rally] go?" said Brad McMillan, chief investment officer at
Commonwealth Financial Network. "From a bearish perspective,
there's still a lot to worry about."
"But from a bullish perspective, we do see the pandemic under
control and no meaningful signs of a second wave yet," he
continued. "A V-shaped recovery seems more possible than it was a
week ago."
The S&P 500 and the Dow are on pace for their third
consecutive week of gains, which would be the longest winning
streak for both indexes this year. The S&P 500 has risen 1.9%
in the week to date, cutting its losses for the year to 4%.
Yet new data released before the markets opened Thursday weighed
on investor sentiment for most the trading session. The Commerce
Department said the U.S. trade deficit widened in April as imports
and exports both dropped sharply amid coronavirus-related shutdowns
around the world. The foreign-trade gap in goods and services
expanded 16.7% from the prior month to a seasonally adjusted $49.41
billion.
Meanwhile, the number of Americans drawing unemployment benefits
ticked up to 21.5 million in the week ended May 23, though the pace
of increase significantly slowed from earlier in the crisis, the
Labor Department said.
Losses across stocks were broad, with nine of the S&P 500's
11 sectors posting declines. A rally in the financial and
industrial sectors -- both of which were hit hard at the beginning
of the stocks selloff -- continued. American Airlines added 41%,
its largest percentage increase on record, according to available
data since December 2013.
Declines were broad across big technology companies, a group
that has largely helped buoy the stock market off its late-March
low. Netflix lost 1.8% and Facebook fell 1.7%. Zoom Video
Communications tumbled 6%.
In Treasury markets, the yield on the 10-year U.S. Treasury note
jumped to 0.818%, from 0.761% Wednesday. Yields rise when bond
prices fall.
Elsewhere, the pan-continental Stoxx Europe 600 fell 0.7% after
the European Central Bank said it would scale up its bond-purchase
program to EUR1.35 trillion ($1.52 trillion) through June 2021. The
bank also left its key interest rate unchanged at minus-0.5%.
The eurozone economy has undergone an unprecedented sharp
contraction as a result of the coronavirus pandemic and there are
"exceptional" levels of uncertainty, ECB President Christine
Lagarde said in a news conference. The ECB's decision was more
aggressive than expected by analysts.
"They've delivered what was wanted by the market," said Seema
Shah, chief strategist at Principal Global Investors. "It's
delivering what it needed to do" which was to extend its ammunition
beyond the autumn, she said, referring to the bond-buying
program.
And in Asia, Hong Kong's Hang Seng Index ticked 0.2% higher,
while the Shanghai Composite Index edged down 0.1%.
"There's a disconnect between equities and the economic
fundamentals," said Alex Wong, a director at hedge fund Ample
Capital, noting that he is holding more cash after gradually
reducing investments in some richly valued new-economy stocks.
"Many investors are looking beyond short-term realities and
banking on hopes of an economic recovery in 2021 as global
economies gradually reopen," he said.
Joanne Chiu contributed to this article.
Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Anna
Hirtenstein at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
June 04, 2020 16:39 ET (20:39 GMT)
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