U.S. Stocks Waver After Selloff
October 27 2020 - 2:32PM
Dow Jones News
By Mischa Frankl-Duval and Amber Burton
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 51 points, or 0.2%, to
27634. The S&P 500 was up 0.2%, and the Nasdaq Composite
advanced 0.8%.
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.
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 from August.
Craig Fehr, an investment strategist at Edward Jones said
despite uncertainty due to the rise in Covid-19 infections he
remains positive about the market's recovery heading into next
year. "I think there are still more gains that can be seen in 2021.
We're probably likely to see the stock market produce both
volatility and returns that are a bit more consistent with
historical norms," he said.
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 5.4% after the drugmaker lowered its
profit guidance for 2020. Shares of Caterpillar slipped 2.8% 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," said
Seema Shah, chief strategist at Principal Global Investors.
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 1%.
Shares of HSBC are up 4% 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 14:17 ET (18:17 GMT)
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