U.S. stocks fell Thursday, hurt by weakness in the labor market as uncertainty over the coronavirus pandemic continues to weigh on hiring.
The S&P 500 dropped 0.8% to 3357. The Nasdaq Composite declined 1.3% to 10910, pushing the tech-heavy index further into negative territory for the month. The Dow Jones Industrial Average snapped a four-day winning streak, closing down 0.5%, or 130 points, to 27902.
The declines on Thursday included big technology companies but were broad-based, after stocks had rallied over the past several months. Investors have attributed part of those gains to action from the Federal Reserve in the early days of the pandemic.
Now, they are waiting for clues on what will come next, either on the economy or action from the government.
“We’ve had so many risk-on moves over the past three or four months that I think it’s a little bit of an indictment on where we stand,” said
director of equity trading at KBW Inc. He said the Federal Reserve had acted swiftly and decisively to aid the economy during the pandemic, but “people are kind of pivoting toward looking to see if Congress can step to the plate here and get something done.”
In data released before the opening bell, filings for jobless benefits held nearly steady at 860,000 last week, according to the Labor Department. The measure has shown stabilization at just below 900,000 in recent weeks. Layoffs remain elevated despite some signs of a broader labor-market recovery.
Stocks opened broadly lower at the open, rebounded slightly in late-morning trading and then resumed their downward slide in the afternoon. The energy and health care sectors were the worst performers for the S&P 500, with materials and industrials the strongest.
Further weighing on trading were comments on Wednesday from Federal Reserve Chairman
who said that the economic outlook is “highly uncertain.” Policy makers indicated concern that easy gains from reopening the economy could mask deeper scars among the most vulnerable businesses, with people likely to face longer spells of joblessness. The central bank also signaled that interest rates would stay near zero until 2023.
“The Fed said it would keep rates low for ages. But that’s not enough,” said
senior investment manager at Aberdeen Standard Investments. “Not taking away is no longer sufficient for this market. You need to do more, more, more.”
founder of New York hedge fund One Tusk Investment Partners, said while the Fed’s accommodative stance boded positively for assets to gain value in the long term, the stock market in the near-term was likely to move in fits and starts.
“You need fiscal policy to come through, you need economic results to come through and we need to come through the pandemic. And on all three fronts it’s improved from where we were in the spring and we’re in a better place than where we were in May, but it’s still not where we were before March. The fundamental economics are still not there yet.”
Investors who had been counting on a vaccine to curtail the coronavirus outbreak and allow the economic recovery to pick up pace were also troubled by conflicting comments about the availability of a vaccine.
A top Trump administration health official predicted that a Covid-19 vaccine may not be available to the general public until next summer, but his comments were quickly disputed by
The director of the U.S. Centers for Disease Control and Prevention,
said a vaccine would be in “very limited supply” at the end of the year. Mr. Trump said a vaccine would be distributed to the general public immediately.
Hope for vaccines or therapeutics has lifted stocks in recent months, with data from even small trials moving stock prices significantly. Mr. Grant, of KBW, described Mr. Redfield’s comments as something of a “reality check” underscoring that the virus and its economic impacts were likely to linger well into 2021.
Separately, Mr. Trump urged congressional Republicans to seek a bigger and more expensive package of coronavirus relief aid.
“There’s fatigue on the fiscal and policy front. The Fed didn’t take any new steps and no deal has passed Congress,” said
a strategist at NatWest Markets.
In the bond market, the yield on the benchmark 10-year U.S. Treasury edged down to 0.682%, from 0.686% Wednesday.
Overseas, the Stoxx Europe 600 fell 0.5%, with losses led by the technology, banking and mining sectors.
The British pound fell 0.6% against the U.S. dollar and 0.5% against the euro after the Bank of England left interest rates unchanged.
In Asia, major equity benchmarks fell by the close of trading. Japan’s Nikkei 225 ticked down 0.7%, while Hong Kong’s Hang Seng Index dropped 1.6%.
In commodities, gold fell 1% to $1,940.00 a troy ounce.
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