By Mischa Frankl-Duval and Amber Burton
U.S. stocks wobbled Tuesday after worries about the coronavirus
pandemic sent markets tumbling to start the week.
The Dow Jones Industrial Average fell 0.8%. The S&P 500
wavered for most of the day but finished 0.3% lower, and the Nasdaq
Composite advanced 0.6%.
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 a record 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 also are 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
Shares of Eli Lilly slipped 6.9% after the drugmaker lowered its
profit guidance for 2020. Shares of Caterpillar slipped 3.3% after
the company reported profits and revenue fell during its most
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 0.9%.
Shares of HSBC rose nearly 4% after the bank set aside $785
million in provisions for bad loans in the September quarter, less
than one-third of the amount set aside in the previous three
In Asia, most major equity benchmarks posted tepid declines.
Hong Kong's Hang Seng Index retreated 0.5% and Japan's Nikkei 225
was little changed, while the Shanghai Composite Index ticked up
Write to Mischa Frankl-Duval at Mischa.Frankl-Duval@wsj.com
(END) Dow Jones Newswires
October 27, 2020 16:19 ET (20:19 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.