The Journal Gazette
Wednesday, July 08, 2020 1:00 am

Wall Street stumbles on overseas markets news

STAN CHOE and ALEX VEIGA | Associated Press

Wall Street's recent string of big gains came to an abrupt stop Tuesday as stocks closed broadly lower following a pullback in markets overseas.

The S&P 500 fell 1.1% after spending most of the day in the red. The sell-off snapped the index's five-day winning streak.

Technology stocks, banks and companies that rely on consumer spending accounted for a big slice of the slide, which accelerated toward the end of the day. Bond yields fell and the price of gold rose, another sign of caution in the market.

Optimism that the economy is on the mend as businesses reopen has helped drive stocks higher. But the recent surge in confirmed new novel coronavirus cases has clouded hopes for a relatively quick economic turnaround. Investors are also girding for what the next few weeks will reveal about the health of corporate America as companies begin reporting their second-quarter results.

“It's not unusual for these five-day runs to be met with a bout of profit-taking, especially given the headlines on the virus,” said Quincy Krosby, chief market strategist at Prudential Financial. “When you move toward overbought conditions, it doesn't take much for the market to burn off some of the froth.”

The selling followed a deeper pullback in France, Germany and elsewhere after the European Union's executive arm said this year's recession caused by the coronavirus pandemic will be deeper than forecast. It also said next year's expected rebound could be weaker than expected.

The U.S. stock market has been churning during the last month, with big daily moves up and down keeping it roughly in place. It's been a small-scale version of the market's movements since the start of the year, when a nearly 34% plunge on worries about the pandemic-caused recession quickly gave way to a tremendous rally that brought the S&P 500 nearly back to its record level.

Lifting markets higher on one end are reports showing budding improvements in the economy. The job market, retail sales and other economic indicators are all still well below where they were before the pandemic struck. But they've stopped plummeting and have begun to grow again as governments relax restrictions meant to slow the spread of the coronavirus.

That's combined with unprecedented amounts of aid from central banks and governments around the world to prop up markets. It also helped send the S&P 500 up 1.6% on Monday, following up on a 4% rise the prior week, which itself helped cap the best quarter for the index since 1998.

At a glance

•The S&P 500 dropped 34.40 points to 3,145.32.

• The Dow Jones Industrial Average fell 396.85 points, or 1.5%, to 25,890.18.

• The Nasdaq index came off an all-time high, losing 89.76 points, or 0.9%, to 10,343.89.

• The Russell 2000 index of small company stocks slid 26.89 points, or 1.9%, to 1,416.

Sign up for our daily headlines newsletter

Top headlines are sent daily