Stocks dip Monday, giving back strong gains made last week as investors fear coronavirus resurgence

Stocks dip Monday, giving back strong gains made last week as investors fear coronavirus resurgence

Stocks are dipping in morning trading on Wall Street Monday and giving back some of the strong gains made last week.

The S&P 500 slipped 0.5%, following drops in Europe and a mixed performance in Asia. While relatively modest, the declines were widespread, and three out of four stocks in the S&P 500 fell.

The losses ate into a recent rally for stocks, which have completely shrugged off the economic devastation currently sweeping the world. Some investors are looking ahead to the possibility of a strong economic recovery later this year, after governments reopen economies and lift business-shutdown orders meant to slow the spread of the coronavirus.

That ultra-optimistic view took some hits Monday, though, as worries rose about the possibility of new waves of infections hitting countries that have already begun to lift lockdown measures.

In South Korea, for example, one nightclub customer has been linked to dozens of new infections. That pushed authorities to reimpose restrictions on nightclubs and bars, as well as delay the reopening of schools by a week. Investors also pointed to small but disconcerting increases of infections in China and in Germany.

Green stock chart going up

Time and money:Looking to invest? Here's how to diversify your portfolio based on when you'll need money

What's happening with stocks:Here's why the market is better than the economy right now

“While the argument that forward-looking market hopes of recovery should override backward-looking economic gloom may not be groundless, it inevitably understates inherent fragilities and risks,” Riki Ogawa of Mizuho Bank said in a report.

The Dow Jones Industrial Average fell 193 points, or 0.8%, to 24,138, as of 10:50 a.m. Eastern time. The Nasdaq was up 0.3%, as a strong run for big technology stocks continues.

Stocks whose profits tend to track most closely with the strength of the economy had the biggest drops, underscoring the worries about a resurgence in infections.

Raw-material producers in the S&P 500 fell 2.3% for the biggest loss among the 11 sectors that make up the index. A weaker global economy wouldn’t need as many basic building blocks.

Financial stocks were also weaker than the rest of the market. They’ve been hit hard this year on worries that the recession will lead to a wave of households and businesses defaulting on their loans. Bank of America dropped 3.9%, and Citigroup lost 4.7%.

Under Armour fell 12.4% for the largest loss in the S&P 500 after the sports apparel company said it swung to a loss last quarter. Its revenue dropped even more than than Wall Street expected.

Smaller stocks also took steeper losses than the rest of the market. They often fall more than the rest of the market when the economy is expected to struggle, in part because of their more limited financial resources. The Russell 2000 index of small-cap stocks was down 1.5%.

The data streaming in on the economy remain oppressively bad. After a report on Friday showed U.S. employers cut a record-setting 20.5 million jobs in April, Italy reported Monday its largest-ever drop in industrial production. More data reports this week include U.S. unemployment claims and retail sales and Australian jobs.

Companies remain uncertain about the future, with many opting to give no financial forecasts during their latest quarterly earnings reports. On Sunday, one of Latin America’s largest airlines, Chile’s Avianca, asked a New York City bankruptcy court for protection from creditors while the carrier reorganizes amid a travel slump it said has cut revenue 80%.

Even outside the possibility of a resurgence of infections, many analysts see other reasons for skepticism about the stock market’s 30% rally since late March. Strategists at Goldman Sachs said the market appears to be overlooking a drop-off in buybacks and dividends as companies look to preserve cash, the threat of more U.S.-China trade tensions and the possibility that the upcoming U.S. elections could lead to higher corporate tax rates.

Most of all, companies themselves are talking about how uncertain the recovery looks, which stands in stark relief to the quick, vigorous rebound that the stock market seems to be pricing in. The CEO of pump- and valve-maker Idex Corp. said last month he expects it to happen in fits and starts.

Earlier, Asian markets were supported somewhat by the Chinese central bank’s promise to use “more powerful” policies to support economic recovery and job creation.

Japan’s Nikkei 225 rose 1%, while stocks in Shanghai were close to flat. South Korean stocks fell 0.5%.

In Europe, the French CAC 40 fell 1.6%, and Germany’s DAX lost 0.9%. The FTSE 100 in London slipped 0.2%.

Investors hoping for reassurance were looking ahead to an appearance by U.S. Federal Reserve chairman Jerome Powell on Wednesday.

ADVERTISEMENT

“He is certainly not going to walk back any of the Fed extraordinary stimulus measures,” said Stephen Inness of AxiTrader in a report. “If anything, he could lay it down even thicker.”

The yield on the 10-year Treasury held steady at 0.68%.

Benchmark U.S. crude rose 0.5% to $24.87 per barrel. Brent crude, the international standard, slipped 1.4%, to $30.52 per barrel.

___

AP Business Writer Joe McDonald contributed.

Source: https://www.usatoday.com/story/money/2020/05/11/dow-stock-market-dips-early-trading/3108441001/

News Related

ORTHER NEWS

Trump’s ‘mission accomplished’ moment is premature and deadly. We have not defeated COVID.

Desperate for crowds and adoration, Trump has put his most fervent supporters at risk of getting a deadly disease. Future historians will be astonished. Read more »

NFLPA president JC Tretter says NFL is putting season, players at risk with its coronavirus approach

NFL Players Association president JC Tretter said Tuesday the NFL is putting the 2020 season at risk with its coronavirus approach, calling on the league to better “prioritize player safety.” “Like many other... Read more »

Brazilian President Jair Bolsonaro says he tested positive for the coronavirus

RIO DE JANEIRO (AP) — Brazil’s President Jair Bolsonaro says he has tested positive for COVID-19 after months of downplaying the virus’ severity. Bolsonaro confirmed the test results while wearing a mask and... Read more »

Venice Film Festival forges ahead amid COVID-19 pandemic with reduced lineup

The show will go on for the Venice Film Festival in September, but with a few modifications due to the COVID-19 pandemic. Organizers said Tuesday that they are pushing forward with plans for... Read more »

Amtrak offers buy-one, get-one promotion on its sleeper trains amid COVID-19 — with a catch

Amtrak wants you to have sweet dreams the next time you travel — so much so that it’s sweetening the deal on its sleeper “roomettes.” The rail service is offering a buy-one-get-one-free discount... Read more »

Florida teen treated with hydroxychloroquine at home before dying of COVID-19, report says

FORT MEYERS, Fla. – The family of a 17-year-old Florida girl who died last month from COVID-19 treated her symptoms at home for nearly a week before taking her to a hospital, a... Read more »

Mookie Betts worried MLB coronavirus testing woes could prevent him from ever playing for Dodgers

During nearly four months away from the game, Mookie Betts said he “stayed away from baseball to keep myself sane.” It’s not hard to understand why. The 2018 American League Most Valuable Player... Read more »

Tom Hanks doesn’t get ‘how common sense has somehow been put into question’ with coronavirus

Read more »

Can Gov. DeSantis force Florida schools to reopen amid the coronavirus pandemic? Some school leaders seem doubtful.

PALM BEACH, Fla. — As concern about the state order spread online, some school leaders said: Not so fast. As Florida educators puzzle over how to start the new academic year, Gov. Ron... Read more »

Texas surpasses 200,000 coronavirus cases after 4th of July holiday weekend

AUSTIN, Texas – Texas reached 200,000 total COVID-19 cases Monday, just 17 days after crossing the 100,000 threshold, a figure that took the state nearly four months to hit. The grim milestone came... Read more »