Big Tech props up Wall Street as S&P 500 closes winning July

NEW YORK - Big Tech continues to steamroll through the pandemic, but much of the rest of Wall Street is strugg

توسط MINERALNEWS در 10 مرداد 1399

NEW YORK - Big Tech continues to steamroll through the pandemic, but much of the rest of Wall Street is struggling Friday, leaving stock indexes mixed.

The S&P 500 was up 0.4% in late trading after flipping between small gains and losses earlier. The Dow Jones Industrial Average was down 61 points, or 0.2%, at 26,251, as of 3:08 p.m. Eastern time, while strength for tech stocks had the Nasdaq composite up 0.8%.

Despite the modest moves, caution was clearly present across markets as the coronavirus pandemic continues to cloud the economy’s prospects, along with gridlock in Congress that’s holding up more aid for it. The 10-year Treasury yield remains close to its lowest level since it dropped to a record low in March. Gold also continued its record-setting run as investors searched for safety, while roughly three out of four stocks in the S&P 500 were weaker.

Stocks that most need the economy to get back to “normal” and the pandemic to subside were dropping, including many in the travel industry.

Expedia Group slumped 4.5% after it reported even weaker results for the latest quarter than Wall Street expected. Its CEO called it “likely the worst quarter the travel industry has seen in modern history.”

Energy companies were also particularly weak as the pandemic sucked away demand for oil. Chevron dropped 3.8% after it reported a worse loss for its latest quarter than Wall Street expected. Energy stocks overall in the S&P 500 sank 1.6% for the biggest loss among the 11 sectors that make up the index.

The economy cratered to its worst quarterly performance on record during the spring, and worries are high that continuing waves of coronavirus infections may halt what had been a budding recovery for it. An extra $600 in weekly unemployment benefits from the U.S. government is also about to expire, and Congress continues to argue about whether and how to provide more support for the economy.

Whether Washington can agree on more aid for out-of-work Americans — and quickly — is the biggest risk for the market in the near term, said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

“If it doesn’t happen in short order, there’s going to be a lot of disappointment and unease,” he said. “I think lawmakers are perhaps underestimating how quickly things could spiral downward without an extension in place. It would take only a few weeks before millions of people are cash strapped.”

Worries about the economy helped send smaller stocks to sharper losses than the rest of the market. They generally have smaller financial cushions to withstand downturns. The Russell 2000 index of small-cap stocks was down 1.4%.

Helping to prop up the S&P 500 was the power of big tech-oriented stocks. Amazon, Apple and Facebook each reported stronger profit for the latest quarter than Wall Street expected late Thursday, and each rose at least 3.9% in their first trading following the reports. These are three of the biggest companies in the world, making up nearly 13% of the S&P 500 themselves, so their movements hold great sway over indexes.

Apple was particularly influential, up 8.9%, following what Wedbush analyst Daniel Ives called a “Picasso-like performance” for its latest quarter.

Google’s parent company, another behemoth in the market, also reported stronger profit than analysts had forecast, but its stock stumbled.

Not only are Big Tech companies growing faster than the rest of the market, some investors have even begun seeing them as safer bets than other stocks because the pandemic is pushing more people online and directly into their wheelhouses. It’s a far cry from 20 years ago when tech stocks were seen as the riskiest investments.

The strength for tech is one of the big reasons the S&P 500 is about to close out its fourth straight month of gains, along with continued, massive amounts of aid from the Federal Reserve. The index has climbed back within 4.5% of its record set in February after earlier being down nearly 34%.

The gains came even though companies have been reporting sharp declines in their profits from year-ago levels, as investors hope that a vaccine can be developed in the next year to corral the pandemic and get the economy closer to normal.

“The market knows earnings are going to be terrible now, with a few select exceptions, for the majority of companies,” Ma said. “What’s really holding up the equity markets is this idea that ‘Yes, it’s a terrible situation now, but the outlook for 2021 and beyond is markedly better.’“

Other markets have not shown as much confidence, though. The yield on the 10-year Treasury ticked down to 0.53% from 0.54% late Thursday. It touched its lowest level since March 9, the day it dropped to its record low just below 0.34%. The yield tends to move with investors’ expectations for the economy and inflation.

Gold for delivery in December, the most actively traded contract, rose $19.10 to settle at $1,985.91 per ounce after earlier climbing as high as $2,005.40.

In Europe, Germany’s DAX lost 0.5%, and France’s CAC 40 was down 1.4%. The FTSE 100 in London slipped 1.5%.

In Asia, Japan’s Nikkei 225 fell 2.8%, South Korea’s Kospi dropped 0.8% and the Hang Seng in Hong Kong lost 0.5%.

Get more of what matters in your inbox

Start your morning with everything you need to know, and nothing you don't. Sign up for First Up, the Star's new daily email newsletter.

Sign Up Now

Stocks in Shanghai rose 0.7% after China reported manufacturing edged up in July and export orders strengthened despite weak U.S. and European demand. The monthly survey was another sign the world’s second-largest economy is gradually recovering from the coronavirus pandemic.


AP Business Writer Yuri Kageyama contributed.
آخرین مطالب