Healthcare, Energy Stocks Lead Major Indexes Lower
By Joe Wallace
U.S. stocks bounced around the flatline Thursday as investors
sold shares of healthcare and energy companies.
The S&P 500 fell 0.1% shortly after the opening bell, while
the Nasdaq Composite slid 0.4%, putting the tech-heavy benchmark on
pace for a fifth straight daily decline. The Dow Jones Industrial
Average added around 73 points.
Many healthcare stocks in the S&P 500 traded in the red
after the U.S. said a day earlier it would support the temporary
waiver of intellectual property provisions that would allow
developing countries to produce Covid-19 vaccines created by
pharmaceutical companies. Vaccine makers including Pfizer and
Johnson & Johnson were among the market's losers on
Energy stocks also struggled, while tech and material stocks
notched minor losses.
Still, major U.S. indexes stand at or close to all-time highs,
bolstered by a surge of economic growth and corporate earnings as
restrictions on some activities are relaxed. Some investors say the
speed of the U.S. recovery, which stands in contrast to some other
regions where Covid-19 vaccines aren't as widespread, will keep
stocks on an upward trajectory.
"We should see cash flows and company cash flows really improve,
especially with the reopenings happening," said Mary Nicola, a fund
manager at PineBridge Investments. Although valuations are high,
stocks remain attractive compared with low-yielding bonds, she
The Labor Department said jobless claims dipped below 500,000
last week for the first time during the Covid-19 pandemic as
layoffs declined and hiring accelerated. Initial claims for
unemployment benefits, a proxy for layoffs, fell to 498,000 from
590,000 a week before.
The upbeat economic news appeared to have little impact on the
market though as investors focused on corporate developments.
Shares of vaccine makers led most other healthcare stocks lower.
Pfizer shed nearly 3%, while Johnson & Johnson slipped 0.4%.
Moderna fell 9.2% and AstraZenecas was recently down 1.3%.
Energy stocks in the S&P 500 slipped 0.8% alongside a mild
pullback in oil prices.
Elsewhere, shares of Etsy dropped more than 12% after the online
crafts marketplace projected a decline in revenue in the second
News Corp, The Wall Street Journal's parent company, and Beyond
Meat are scheduled to report earnings after markets close.
Companies have blown past forecasts so far this earnings season.
Of the 381 companies on the S&P 500 that had reported through
Wednesday, 84% had topped analysts' expectations, according to
Yet many companies beating forecasts have seen a lackluster
response in their share price. Some investors say that is a sign,
alongside recent volatility in tech stocks, that the rally that
began last March is beginning to flag.
"Although the S&P is just 1% off its high, I think equity
markets are beginning to look very fatigued," said Paul O'Connor,
head of multiasset investments at Janus Henderson.
Indicators including surveys by the American Association of
Individual Investors suggest investors are almost uniformly
bullish, a setup that tends to precede a pullback in stocks,
according to Mr. O'Connor. "There are such high expectations
embedded in markets that we're going to need a steady stream of
good news just to maintain the current prices," he said.
In the bond market, the yield on 10-year Treasury notes slipped
to 1.583% from 1.584% Wednesday. Yields, which move in the opposite
direction to bond prices, have fallen for four consecutive
Overseas, the Stoxx Europe 600 slipped 0.3%, weighed down by
shares of oil, gas, travel-and-leisure and technology companies. In
Asia, Japan's Nikkei 225 rose 1.8% and China's Shanghai Composite
--Michael Wursthorn contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
May 06, 2021 10:19 ET (14:19 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.