By Anna Isaac and Juliet Chung
U.S. stocks fell Thursday, hurt by weakness in the labor market
as uncertainty over the coronavirus pandemic continues to weigh on
hiring.
The S&P 500 dropped 0.8% to 3357. The Nasdaq Composite
declined 1.3% to 10910, pushing the tech-heavy index further into
negative territory for the month. The Dow Jones Industrial Average
snapped a four-day winning streak, closing down 0.5%, or 130
points, to 27902.
The declines on Thursday included big technology companies but
were broad-based, after stocks had rallied over the past several
months. Investors have attributed part of those gains to action
from the Federal Reserve in the early days of the pandemic.
Now, they are waiting for clues on what will come next, either
on the economy or action from the government.
"We've had so many risk-on moves over the past three or four
month that I think it's a little bit of an indictment on where we
stand," said R.J. Grant, director of equity trading at KBW Inc. He
said the Federal Reserve had acted swiftly and decisively to aid
the economy during the pandemic but, "people are kind of pivoting
toward looking to see if Congress can step to the plate here and
get something done."
In data released before the opening bell, filings for jobless
benefits held nearly steady at 860,000 last week, according to the
Labor Department. The measure has shown stabilization at just below
900,000 in recent weeks. Layoffs remain elevated despite some signs
of a broader labor-market recovery.
Stocks opened broadly lower at the open, rebounded slightly in
late-morning trading and then resumed their downward slide in the
afternoon. The energy and healthcare sectors were the worst
performers for the S&P 500, with materials and industrials the
strongest.
Further weighing on trading were comments on Wednesday from
Federal Reserve Chairman Jerome Powell, who said that the economic
outlook is "highly uncertain." Policy makers indicated concern that
easy gains from reopening the economy could mask deeper scars among
the most vulnerable businesses, with people likely to face longer
spells of joblessness. The central bank also signaled that interest
rates would stay near zero until 2023.
"The Fed said it would keep rates low for ages. But that's not
enough," said James Athey, senior investment manager at Aberdeen
Standard Investments. "Not taking away is no longer sufficient for
this market. You need to do more, more, more."
Vivian Lau, founder of New York hedge fund One Tusk Investment
Partners, said while the Fed's accommodative stance boded
positively for assets to gain value in the long term, the stock
market in the near-term was likely to move in fits and starts.
"You need fiscal policy to come through, you need economic
results to come through and we need to come through the pandemic.
And on all three fronts it's improved from where we were in the
spring and we're in a better place than where we were in May, but
it's still not where we were before March. The fundamental
economics are still not there yet."
Investors who had been counting on a vaccine to curtail the
coronavirus outbreak and allow the economic recovery to pick up
pace were also troubled by conflicting comments about the
availability of a vaccine.
A top Trump administration health official predicted that a
Covid-19 vaccine may not be available to the general public until
next summer, but his comments were quickly disputed by President
Trump. The director of the U.S. Centers for Disease Control and
Prevention, Robert Redfield, said the vaccine would be in "very
limited supply" at the end of the year. Mr. Trump said a vaccine
would be distributed to the general public immediately.
Hope for vaccines or therapeutics have lifted stocks in recent
months, with data from even small trials moving stock prices
significantly. Mr. Grant, of KBW, described Mr. Redfield's comments
as something of a "reality check" underscoring that the virus and
its economic impacts were likely to linger well into 2021.
Separately, Mr. Trump urged congressional Republicans to seek a
bigger and more expensive package of coronavirus relief aid.
"There's fatigue on the fiscal and policy front. The Fed didn't
take any new steps and no deal has passed Congress," said James
McCormick, a strategist at NatWest Markets.
In the bond market, the yield on the benchmark 10-year U.S.
Treasury edged down to 0.682%, from 0.686% Wednesday.
Overseas, the Stoxx Europe 600 fell 0.5%, with losses led by the
technology, banking and mining sectors.22288
The British pound fell 0.6% against the U.S. dollar and 0.5%
against the euro after the Bank of England left interest rates
unchanged.
In Asia, major equity benchmarks fell by the close of trading.
Japan's Nikkei 225 ticked down 0.7%, while Hong Kong's Hang Seng
Index dropped 1.6%.
In commodities, gold fell 1% to $1,940.00 a troy ounce.
Write to Anna Isaac at anna.isaac@wsj.com and Juliet Chung at
juliet.chung@wsj.com
(END) Dow Jones Newswires
September 17, 2020 17:04 ET (21:04 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.