Stocks Turn Lower, Set to Snap Winning Streak
By Joe Wallace and Sam Goldfarb
The S&P 500 turned lower Tuesday afternoon, putting it at
risk of ending a seven-day winning streak.
The broad stock market index fell 0.8% after rising for most of
the session and flirting with setting its first record since
February. The Dow Jones Industrial Average dropped about 140
points, or 0.9%, while the technology-heavy Nasdaq Composite Index
Investors continued to closely watch developments in Washington
where Democrats and Republicans remained at odds over a broad
economic relief package.
Shares of companies that are particularly sensitive to the
direction of the U.S. economy--such as banks, energy firms, cruise
operators and airlines--had helped pull indexes higher for much of
Investors, however, sold shares of fast-growing technology
companies like Amazon.com and Netflix, a reversal of what has been
a hugely popular trade in recent months fueled by a belief that
those companies are relatively shielded from the pandemic's
Other assets viewed as havens also declined. The price of gold
price of gold fell 4.5% to $1,932.60 a troy ounce, its biggest
one-day percentage decline since March. And the yield on the
benchmark 10-year U.S. Treasury note rose to 0.657% from 0.573%
Monday, marking its highest close since early June. Yields rise
when bond prices fall.
In Washington, administration officials and Democratic leaders
urged each other to return to the negotiating table after Mr. Trump
issued executive actions on jobless aid and other relief over the
"The U.S. fiscal stimulus is absolutely critical to keeping
market momentum positive," said Nicholas Brooks, head of economic
and investment research at Intermediate Capital Group. "Markets are
assuming that ultimately Congress will come through with a package,
and that there's a lot of brinkmanship going on."
"If we don't get a deal, I think markets will correct quite
quickly," Mr. Brooks said.
Mr. Trump also said late Monday that he was "very seriously"
considering a cut to capital-gains tax and paring taxes for
A recent surge in coronavirus cases continued to show signs of
abating. The U.S. reported fewer than 50,000 new cases for the
second day in a row Monday, pushing the total number close to 5.1
million, according to Johns Hopkins University.
However, investors are concerned by a pickup in infections in
parts of Europe that had appeared to bring the virus under
"It's hard for markets to digest the conflicting newsflow" on
the virus in different regions, said Hugh Gimber, global market
strategist at J.P. Morgan Asset Management. One positive for the
world economy is that local lockdown measures "have had a less
striking impact on mobility and spending data than the much more
stringent lockdowns earlier in the year, " he said.
Among gainers, Norwegian Cruise Line climbed 3.6%, while
JPMorgan Chase advanced 3.2%.
Earnings season for the largest U.S. companies is in its final
innings. Shares in International Flavors & Fragrances fell 3.9%
after the company reported a 40% drop in operating profits in the
second quarter from a year before. Of the 91% of companies on the
S&P 500 that had reported by Monday, 82% had beaten analysts'
profit forecasts, according to FactSet.
Overseas, the Stoxx Europe 600 jumped 1.7%. Hong Kong's Hang
Seng Index snapped three days of losses to rise 2.1%. The increase
was driven partly by a rally in shares of Macau casino stocks,
which jumped after the semiautonomous territory's government eased
quarantine requirements for visitors from mainland China.
Elsewhere, Japan's Nikkei 225 gained 1.9%, while the Shanghai
Composite Index lost 1.2%.
--Frances Yoon and Xie Yu contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com and Sam Goldfarb at
(END) Dow Jones Newswires
August 11, 2020 16:14 ET (20:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.