Wall Street falls after rally

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 17, 2019. REUTERS/Brendan McDermid

U.S. stocks fell sharply on Thursday after a second straight rise in weekly jobless claims fueled worries about a post-pandemic economic recovery, while President Donald Trump floated the possibility of delaying the Nov. 3 presidential elections.

Trump, without evidence, repeated his claims of mail-in voter fraud and raised the question of a delay in a tweet, though the Constitution bestows that power on Congress, not the president.

Earlier in the day, official data showed the U.S. economy suffered its steepest contraction since the Great Depression in the second quarter, as business activity came to an abrupt halt on efforts to slow the virus outbreak.

Jobless claims also rose in the latest week, adding to signs the momentum of economic recovery has slowed as coronavirus cases spiraled in southern and western U.S. states.

“The short-term data indicates we’re kind of flattening out a little bit, which indicates the recovery is much less a ‘V’ and a little bit more a ‘square root sign’ at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“The markets are taking a breather here and assessing what the next six months look like. We’ve got plenty of stuff on our plate from China to the elections, the virus to reopening schools.”

The U.S. Federal Reserve on Wednesday acknowledged the surge in cases was likely stalling recovery, while pledging to support the economy as long as necessary, giving a boost to Wall Street’s three main indexes late in the session.

All S&P sectors were in the red on Thursday, led by declines in economically sensitive sectors — financials .SPSY, energy .SPNY and materials .SPLRCM.

At 11:26 a.m. ET, the Dow Jones Industrial Average was down 302.28 points, or 1.14 per cent, at 26,237.29, the S&P 500 was down 27.39 points, or 0.84 per cent, at 3,231.05. The Nasdaq Composite was down 29.85 points, or 0.28 per cent, at 10,513.09.

Qualcomm Inc, United Parcel Service Inc, and Procter & Gamble Co gained following quarterly results, with Johnson & Johnson up slightly as it started human safety trials for its COVID-19 vaccine.

Corporate earnings have tended to be better than expectations so far, but the scale of the economic damage from the pandemic, and the likelihood it will drag on are weighing on investors’ minds.

The White House and Congress are still at loggerheads over a coronavirus relief plan, ahead of the lapse of the enhanced $600-per-week unemployment benefits on Friday.

Apple Inc, Amazon.com Inc, Alphabet Inc and Facebook Inc will report earnings later on Thursday, with some on Wall Street questioning their valuations after this year’s gains.

Shares of the companies, which have a combined market value of about $5 trillion, fell between 0.3% and 0.5 per cent.

Declining issues outnumbered advancers for a 3.16-to-1 ratio on the NYSE and a 1.96-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and no new low, while the Nasdaq recorded 47 new highs and 25 new lows.


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