U.S. Stocks Waver After Selloff
October 27 2020 - 10:15AM
Dow Jones News
By Mischa Frankl-Duval
U.S. stocks wobbled Tuesday, attempting to stabilize after
worries about the coronavirus pandemic sent markets tumbling to
start the week.
The Dow Jones Industrial Average fell 50 points, or 0.2%, to
27631 shortly after the opening bell. The S&P 500 was unchanged
and the Nasdaq Composite advanced 0.2%.
Rising Covid-19 infection levels around the world are
compounding worries about the global economic outlook. The
seven-day average of new cases in the U.S. reached an all-time high
Monday, while a number of countries in Europe, including Italy,
Spain and Russia, tightened restrictions on activity to try to curb
the spread of the virus.
"The key thing that we're watching at the moment is going to be
the Covid numbers. More importantly, how countries are responding
to them," said Seema Shah, chief strategist at Principal Global
Investors. "The way that governments have stopped reprioritizing
opening, and gone back to lockdowns: that's what's freaking out
markets."
One factor that has helped stocks bounce back from selloffs in
the past: evidence that parts of the economy have started to
recover from disruptions and shutdowns related to the pandemic.
Orders for long-lasting factory goods increased for the fifth
consecutive month in September, Commerce Department data showed
Tuesday. Orders rose 1.9% in September compared with August.
Some investors are also betting that authorities will avoid the
stringent lockdown measures put in place in the spring, which
brought the global economy to a jarring halt.
"At the moment, the market is discounting for further lockdowns
and for the economy to suffer dramatically again, and I just don't
see that," said Patrick Spencer, managing director at U.S.
investment firm Baird. "We're in a V-shaped recovery."
A string of earnings results drove swings across the stock
market.
Shares of Eli Lilly slipped 5.1% after the drugmaker lowered its
profit guidance for 2020. The company left previous forecasts for
revenue and adjusted earnings unchanged.
Shares of Caterpillar slipped 1.4% after the company reported
profits and revenue fell during its most recent quarter.
Results from Microsoft, due after the closing bell, may give
investors additional cues on the strength of the largest U.S.
technology firms. Those companies have been responsible for much of
the stock market's strength this year.
"For a lot of companies, mainly big tech, where the expectations
are pretty high, we need to see them meet those expectations," Ms.
Shah said. Investors are going to be particularly focused on
forward-looking projections, and any sense that companies
anticipate further pain in 2021 could damage sentiment, she said.
"The greatest concern is going to be the guidance, because it's
[the fourth quarter] that's been the real concern."
Overseas, the Stoxx Europe 600 ticked down 0.5%.
London-listed shares of HSBC jumped 5% after the bank set aside
$785 million in provisions for bad loans in the September quarter,
less than a third of the amount set aside in the previous three
months.
In Asia, most major equity benchmarks posted tepid declines.
Hong Kong's Hang Seng Index retreated 0.5% and Japan's Nikkei 225
was largely flat, while the Shanghai Composite Index ticked up
0.1%.
Write to Mischa Frankl-Duval at Mischa.Frankl-Duval@wsj.com
(END) Dow Jones Newswires
October 27, 2020 10:00 ET (14:00 GMT)
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