By Caitlin McCabe and Anna Hirtenstein
The S&P 500 broke a four-session winning streak Thursday in
a volatile trading session that forced investors to weigh their
optimism about the reopening of the economy against data that
showed the pandemic's continued toll.
The index tumbled 10.52 points, or 0.3%, to finish the day at
3112.35. The Nasdaq Composite fell 67.10 points, or 0.7%, to end at
9615.81, pulled down by declines in shares of megacap technology
companies.
The Dow Jones Industrial Average finished the day largely where
it started, rising just 11.93 points to 26281.82 after swinging
between losses and gains. Companies from Microsoft to UnitedHealth
Group to Nike dragged the blue-chip index down 0.05% to
26281.82.
A 6.4% rally in heavyweight Boeing, meanwhile, helped mitigate
the losses that the other indexes suffered.
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.
Thursday's data on job losses and trade paused that rally,
giving investors the chance to take profits after a dramatic stock
rebound that kicked off in late March.
"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 mark the longest weekly
winning streak for the indexes this year. The S&P 500 has risen
2.2% week-to-date, cuttings its losses for the year to 3.7%.
Meanwhile, the Dow is up 3.5% for the week, on pace for its
third weekly gain of more than 3%. The last time that happened was
in July 1933.
Disappointing data released before the markets opened Thursday
weighed on investor sentiment. 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 on unemployment
benefits rose to 21.5 million in the week ended May 23, the Labor
Department said. However, the pace of increase significantly slowed
from earlier in the crisis.
Losses across stocks were broad, with eight of the S&P 500's
11 sectors posting declines. A rally continued in the financials,
materials and industrials sectors -- all of which were hit hard at
the beginning of the stocks selloff. American Airlines added 41%,
its largest one-day percentage increase since December 2013 when
American and US Airways Group merged.
Declines were broad across big technology companies, a group
that has 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 press conference.
"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.
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 17:15 ET (21:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.