Market Report

Nasdaq posts gains while most of markets retreat

A girl runs near the New York Stock Exchange on Thursday. Worry that the economy may be losing steam sent stocks lower in Thursday trading.
(AP/Mark Lennihan)
A girl runs near the New York Stock Exchange on Thursday. Worry that the economy may be losing steam sent stocks lower in Thursday trading. (AP/Mark Lennihan)

NEW YORK -- Most of Wall Street wilted Thursday on worries that the economy's recent improvements may be set to fade as coronavirus cases keep climbing.

The S&P 500 lost 0.56%, with three in four stocks in the index falling. The sharpest drops hit oil companies, airlines and others whose fortunes are most closely tied to a reopening and strengthening economy. Treasury yields also sank in another sign of increased caution.

The Dow Jones Industrial Average dropped 361.19 points, or 1.4%, to 25,706.09, while the 17.89-point fall for the S&P to 3,152.05 was just its second loss in the past eight days.

Smaller stocks sank more than the rest of the market, which often happens when investors are downgrading their expectations for the economy. The Russell 2000 index of small-cap stocks lost 28.48, or 2%, to 1,398.92.

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The Nasdaq composite was an outlier as investors continue to bet that big tech-oriented stocks can keep growing almost regardless of the economy's strength. It added 55.25, or 0.5%, to 10,547.75 and hit another record.

"The broad equity market is navigating through a zone of uncertainty," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

"There are ample reasons for caution," he said. "Clearly there's uncertainty surrounding the impact and duration of this virus."

Thursday's headline economic report showed that a little more than 1.3 million workers filed for unemployment claims last week. It's a high number, but it's also down from 1.4 million the previous week and from a peak of nearly 6.9 million in late March.

The improvements help validate investors' earlier optimism that the economy can recover as states and other governments relax restrictions put in place this year to slow the coronavirus pandemic. Such optimism helped the S&P 500 rally back to within 7% of its record, after being down nearly 34%.

But economists point to a troubling slowdown in the pace of improvements, including moderating declines in the four-week average of jobless claims. Further gains for the job market are going to be more difficult, said Patrick Schaffer, global investment specialist at J.P. Morgan Private Bank. The U.S. unemployment rate is currently 11.1%.

Investors are worried that worsening infection levels across swaths of the U.S. South and West and in other global hot spots could derail the budding recovery.

"When the restrictions were relaxed in the beginning part of June, you saw parts of the tangible economy do really well," Schaffer said. "A lot of that has been unwound as we've seen a resurgence in case count and some restrictions being put in place."

The yield on the 10-year note, which tends to move with investors' expectations for the economy and inflation, sank to 0.60% from 0.65% late Wednesday.

The price of gold held above $1,800 per ounce. Gold tends to rise when investors are worried about the economy, and on Wednesday it touched its highest price since September 2011. After flipping between small gains and losses, gold for delivery in August dipped $16.80 to settle at $1,803.80.

Benchmark U.S. crude dropped $1.28 to settle at $39.62 per barrel.

The sharpest stock losses hit companies whose profits tend to rise and fall most closely with the strength of the economy. Energy stocks dropped 4.9% for the biggest loss among the 11 sectors that make up the index. Exxon Mobil sank 4.1%, and ConocoPhillips fell 6.6%.

Companies across the country are preparing to report their second-quarter results in coming weeks, and forecasts are uniformly dismal.

United States flags decorate the New York Stock Exchange, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
United States flags decorate the New York Stock Exchange, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
Workers wearing masks walk by the New York Stock Exchange during the coronavirus pandemic, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
Workers wearing masks walk by the New York Stock Exchange during the coronavirus pandemic, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
The Fearless Girl statue stands in front of the New York Stock Exchange, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
The Fearless Girl statue stands in front of the New York Stock Exchange, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
A woman wearing a mask walks by the New York Stock Exchange during the coronavirus pandemic, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
A woman wearing a mask walks by the New York Stock Exchange during the coronavirus pandemic, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
People walk by the New York Stock Exchange during the coronavirus pandemic, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
People walk by the New York Stock Exchange during the coronavirus pandemic, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
Signage is shown at the New York Stock Exchange, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)
Signage is shown at the New York Stock Exchange, Thursday, July 9, 2020, in New York. (AP Photo/Mark Lennihan)

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