Stocks end 3-day winning streak
Where does the U.S. stimulus money come from? Here's how the Federal Reserve is saving the economy from the COVID-19 crisis. USA TODAY
U.S. stocks took a pause from recent gains Wednesday, snapping a three-day winning streak as investors weighed hopes for a global economic recovery as more economies reopen following the coronavirus pandemic.
The Dow Jones Industrial Average fell 170.37 points to close at 26,119.61, after soaring more than 500 points a day earlier following data that showed U.S. retail spending was stronger than expected. The Standard & Poor’s 500 slipped 0.4% to end at 3,113.49, as losses in energy shares offset gains elsewhere.
Global stock markets have regained most of this year’s losses as investors count on a rebound from the pandemic despite rising infections in the United States, Brazil and some other major countries.
The chief risk for the market lies in rising infection levels in several hotspots around the world, including Florida, Texas and China. Even if ities don’t reinstate widespread lockdowns, the worry is that businesses and consumers could get frightened by new waves of infections and pull back on their spending.
Analysts warn the gains are bigger and faster than justified by the uncertain economic outlook. Financial markets have been underpinned by promises from the Federal Reserve and other central banks to inject more money into economies through bond purchases and other steps.
Market professionals, however, are skeptical about the U.S. stock market’s run since it began climbing after hitting a bottom in late March, down 34% from its record. Stocks have swung wildly in recent sessions following a weekslong rally.
“This market continues to be driven by emotion, and this week’s news has been optimistic, following last week’s trend that was cautious,” Mark Hackett, chief of investment research at Nationwide. “We will likely continue to see waves of volatility until the fundamental picture becomes clearer.”
Fed Chairman Jerome Powell testified before Congress on monetary policy Wednesday. On Tuesday, Powell renewed the central bank’s vow to keep interest rates near zero until “the economy has weathered recent events,” noting significant uncertainty about the strength of the recovery from the coronavirus pandemic despite a recent "modest" rebound.
Investor sentiment got another boost Wednesday following a batch of stronger-than-expected housing data that signaled 真人百家家乐官网网站homebuyers are returning to the housing market. Mortgage applications to buy a 真人百家家乐官网网站home climbed 4% to an 11-year high as rates dropped to another record low, according to the Mortgage Bankers Association. Applications jumped 21% higher compared with the same period a year ago.
Cruise lines had the sharpest losses in the S&P 500, but other companies whose profits are closely tied to the strength of the economy were also weak. Energy companies in the S&P 500 fell more than 3% for the largest loss among the 11 sectors that make up the index. Banks were also laggards, with JPMorgan Chase down 2.6% and Bank of America down 3.1%.
Big technology companies made modest moves higher, including a 0.4% rise for Microsoft.
A barrel of U.S. crude oil for delivery in July slipped 42 cents to settle at $37.96. Brent crude, the international standard, slipped 25 cents to $40.71 per barrel.
In Europe, London's FTSE 100 rose 0.2% and Frankfurt’s DAX added 0.5%. The CAC 40 in France advanced 0.9%. In Asia, the Shanghai Composite Index edged 0.1% higher while the Hang Seng in Hong Kong added 0.6%.
Contributing: The Associated Press