U.S. Stocks Point to Fourth Week of Declines
September 25 2020 - 03:34PM
Dow Jones News
By Anna Isaac and Dawn Lim
U.S. stocks edged higher in another volatile session Friday, but
the S&P 500 and Dow Jones Industrial Average remained on course
for their fourth consecutive week of declines.
The toll of the coronavirus pandemic, the prospects of an uneven
U.S. economic recovery and uncertainty from a presidential race has
injected turbulence in markets. The major stock indexes swung
between small losses and gains Friday morning before beginning
their ascent.
The S&P 500 added 1.2% in afternoon but is on track for a
weekly loss of 0.9%. The Dow Jones Industrial Average rose 0.9%,
poised to fall 2.1% for the week. The Nasdaq Composite climbed 1.8%
and is on track to snap a three-week losing streak with a gain of
0.6%.
"The choppiness is the market trying to figure out where the
heck we are, " said Brad McMillan, Commonwealth Financial Network's
chief investment officer. "We're going to see more choppiness going
forward."
Investors' confidence has been crimped by elevated levels of new
coronavirus infections in the U.S. and Europe, as well as signs
that the global economic recovery is slow and uneven. The prospect
of a contested November presidential election adds to
uncertainty.
"We're in a bit of a holding pattern. It feels like a bit of a
phony market right now. I don't think there's any key factors that
have changed," said David Coombs, head of multiasset investments at
Rathbone Brothers. "Until we get a vaccine for the population at
large, the coronavirus course is uncertain."
New economic data provided hints of recovery in the
manufacturing industry. New orders for durable goods rose 0.4% in
August from July, the Commerce Department said Friday. The
increase, on the heels of bigger advances earlier in the summer,
was weaker than economists predicted. Many investors say the true
litmus test of an economic recovery is whether they see stronger
signs of a rebound in jobs.
"You've had the dichotomy of some good news and bad news," said
Jeffrey Schulze, an investment strategist at ClearBridge
Investments. "The market is having a difficult time finding its
footing."
The U.S. reported about 44,000 new coronavirus cases Thursday,
up from about 37,000 a day earlier and bringing the total number of
people who have been infected in the country to about 6.98 million,
according to data compiled by Johns Hopkins University. Daily new
infections have been going up again since mid-September.
Investors are awaiting signs of progress on additional U.S.
stimulus spending from the government. House Democrats are readying
a scaled-down package of about $2.4 trillion that would include
assistance to airlines, restaurants and small businesses. But
Republicans said the chances of a deal before Election Day remained
slim.
"We've had such a huge fiscal response already, it's easy to say
the response now is disappointing," said Holger Schmieding, chief
economist at Berenberg Bank. "It's basically a matter of time:
before or after the election. Significant support is coming. The
Fed is asking for it."
In bond markets, the yield on the U.S. 10-year Treasury ticked
down to 0.661%, from 0.664% Thursday.
In commodities markets, gold fell 0.6% to $1857.70 a troy ounce
Friday and suffered the largest weekly percentage decline since
March. The precious metal has been hit by a strengthening dollar
and falling inflation expectations.
Shares of Novavax surged 11% after the company said Thursday it
started a final-stage study of its experimental Covid-19 vaccine in
the U.K. The stock, which has been popular among investors using
the Robinhood app, has gained some 2,700% this year.
Barclays analysts touted a more bullish outlook for cruise lines
and said in a Friday research note the sector is "nearing an
inflection point." The cruise industry has been proposing safety
measures in hopes of bringing back limited voyages from the U.S.
Norwegian Cruise Line Holdings advanced 11%, while Carnival rose 8%
and Royal Caribbean Group rose 7%.
"As we go into the fourth quarter, risks are starting to pile
up, making it harder for equities to make gains. It's the election
risk, the Covid risk, and the fiscal risk," said Seema Shah, chief
strategist at Principal Global Investors. "And then of course the
economic data: we've had all the easy gains in the third quarter
and we want to be sure that momentum isn't running out."
Overseas, the pan-continental Stoxx Europe 600 fell 0.1%.
The major Asian equity benchmarks ended the week on a mixed
note. Japan's Nikkei 225 rose 0.5% Friday, while China's Shanghai
Composite Index ticked down 0.1%.
Write to Anna Isaac at anna.isaac@wsj.com and Dawn Lim at
dawn.lim@wsj.com
(END) Dow Jones Newswires
September 25, 2020 15:19 ET (19:19 GMT)
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