U.S. Stocks Open Lower as Economic Concerns Flare Up
By Caitlin Ostroff
Stocks slipped Thursday, while Chinese stocks dropped by the
most in over five months, amid fresh concerns about rising
coronavirus infections and the global economy's faltering recovery
from the pandemic.
The S&P 500 fell 0.7% in the early minutes of U.S. trading,
while the Dow Jones Industrial Average lost 162 points, or 0.6%,
and the Nasdaq Composite Index retreated 1%.
Overseas, the Shanghai Composite Index retreated 4.5% by the
close of trading in its steepest drop since February. Data on
Thursday showed pockets of weakness, especially in China's retail
sector, even as the world's second-largest economy returned to
growth. Meanwhile, the pan-continental Stoxx Europe 600 declined
U.S. retail sales for June rose 7.5%, more than economists
expected, but investors are growing increasingly concerned that
further recovery could be stymied by a recent surge in infections
across the country. Some states are closing restaurants, bars and
stores to slow its spread, and that's likely to dampen consumer
spending, a crucial driver of the U.S. economy.
"The key issue now is concern about a new wave of infections and
the potential impact on the economic recovery," said Andrew Hunter,
senior U.S. economist at Capital Economics. Even if the retail
sales data is strong, "it's sort of old news and the bigger concern
is how big of a potential slowdown are we looking to in July," he
Fresh figures on jobless claims showed that 1.3 million
Americans filed for unemployment in the week ending July 11. The
weekly tally of new unemployment claims by laid-off workers has
slowly trended downward in recent weeks, but remain at historically
In premarket trading, shares of Norwegian Cruise Line tumbled
9.5% after it said it is looking to raise $925 million in debt and
$250 million in an underwritten public offering of shares as its
sailings have been canceled due to the coronavirus pandemic, drying
Shares of Bank of America fell 2.9% after it reported that
profit tumbled 52% in the second quarter after the bank set aside
billions of dollars to prepare for soured loans.
At rival Goldman Sachs Group, traders and investment bankers
posted near-record revenue on Wednesday to keep firmwide profits
steady, throwing an elbow to larger commercial-bank rivals that
have blamed the pandemic for poor quarterly results.
Twitter's shares fell 4.2% in offhours trading after the social
media company was hit with a widespread attack Wednesday that
allowed hackers to take over an array of accounts including those
of celebrities, politicians and billionaires. Shares of Dell
Technologies rose 10.4% in offhours trading after the company said
Wednesday it is considering a potential spinoff of its 81% equity
ownership interest in VMWare Inc.
In bond markets, the yield on the 10-year Treasury fell to
0.609%, from 0.629% Wednesday.
Across Asia, most major equity benchmarks ended the day down.
Hong Kong's Hang Seng Index retreated 2%, while Japan's Nikkei 225
lost about 0.8%.
Data on China's retail sector showed it is recovering more
slowly than expected, with sales falling 1.8% in June from a year
earlier. Economists had projected a 0.3% growth.
Investors also said that moves in stock indexes world-wide are
likely outsized due to lower trading volumes.
"We're entering a period in the summer where liquidity tends to
diminish, " said Yuko Takano, a portfolio manager at Newton
Investment Management. Ms. Takano said she is focusing on corporate
earnings over the next few weeks to assess how corporations have
fared, and expects economic data to remain choppy.
--Chong Koh Ping contributed to this article.
Write to Caitlin Ostroff at firstname.lastname@example.org
(END) Dow Jones Newswires
July 16, 2020 09:46 ET (13:46 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.