Stocks shake off some early stumbles and end broadly higher

By STAN CHOE and DAMIAN J. TROISE AP Business Writers

The stock market ended a choppy day higher as a turnaround by banks and energy companies helped end a two-day losing streak. The S&P 500 managed a gain of 1.2% Thursday, but it’s still down 2.6% for the week. The latest erratic trading came as hopes for a relatively quick economic recovery continue to collide with caution that moves to reopen the economy could backfire by causing more infections if carried out too soon. Energy stocks did well after the price of crude oil bounced up 9% on hopes that demand could pick up after collapsing amid the coronavirus shutdowns.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:

Stocks are zigzagging through another choppy day of trading on Wall Street Thursday, as hopes for a relatively quick economic recovery continue to collide with skepticism that it can happen anytime soon.

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The S&P 500 was up 0.3%, as of 3 p.m. Eastern time,, after the market flip-flopped between losses and gains a couple times. The erratic trading in U.S. markets followed up on losses in Asia and Europe, while Treasury yields sank in a sign of increased pessimism.

It’s the latest wobble for Wall Street, which has been wavering in recent weeks as it digests the huge, dizzying moves the market made in earlier months. Stocks have drifted up and down in a relatively tight range through May, after a 34% plunge for the S&P 500 early this year immediately gave way to a sudden 30% rally.

Investors are rethinking their bets that the reopening of economies around the world will allow for a relatively quick resumption of growth. Another possible flare-up in tensions between the world’s largest economies is also hitting markets, with comments from President Donald Trump about China further weighing on them Thursday.

The Dow Jones Industrial Average was up 226 points, or 1%, at 23,474 after pulling back from an earlier loss of 458 points The Nasdaq composite was up 0.1%.

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Stocks started the day off with sharp losses, but they turned around after some areas of the market that have been beaten down heavily this year showed some more life.

Financial stocks in the S&P 500 jumped 2.1% for the biggest gain among the 11 sectors that make up the index. Wells Fargo jumped 6.7%, JpMorgan Chase rose 4.1% and Bank of America added 3.7%. Through much of this year, investors have pummeled bank stocks on worries that low interest rates and the severe recession will mean less profit for making loans.

Energy stocks, another corner of the market that’s been pummeled this year, also were strong after the price of oil rose.

Before the recession hit, U.S. stocks quickly lost just over a third of their value as investors anticipated an avalanche of layoffs hitting the economy. Those fears have indeed turned true, and a report on Thursday showed that nearly 3 million U.S. workers filed for unemployment benefits. That brings the total to roughly 36 million in the two months since the pandemic caused widespread orders for people to stay at home and businesses to shut down.

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But stocks began climbing in late March after massive amounts of aid promised by the Federal Reserve and Capitol Hill convinced markets that the worst-case scenario of a financial crisis wouldn’t be happening. Gains accelerated on hopes that the recession, while severe, could be relatively short and that the economy could resume its growth as shutdown orders lift.

Many professional investors have warned the rally was overdone, though, given how much uncertainty exists about how long the recession will last. On Wednesday, Federal Reserve Chair Jerome Powell warned this could become a prolonged downturn, while the top infections diseases expert in the U.S. said Tuesday that reopening the economy too quickly could backfire and lead to more deaths.

Recently, worries about renewed U.S.-China tensions have also weighed on markets. A bruising trade war between the two had dragged on the global economy before the pandemic hit, and some U.S. politicians are now blaming China for not doing more to stop COVID-19 from spreading.

“I have a very good relationship,” with China’s leader, Xi Jinping, Trump said in an interview with Fox Business Network, “but I just — right now, I don’t want to speak with him. I don’t want to speak with him.”

Trump also said the government is considering barring Chinese stocks trading on U.S. exchanges unless they follow U.S. accounting rules.

The yield on the 10-year Treasury fell to 0.62% from 0.64% late Wednesday. It tends to fall when investors are downgrading their expectations for the economy and inflation.

In Europe, France’s CAC 40 lost 1.7%, and Germany’s DAX lost 2%. The FTSE 100 in London fell 2.8%. In Asia, Japan’s Nikkei 225 lost 1.7%, the Hang Seng in Hong Kong dropped 1.4% and the Kospi in South Korea slipped 0.8%.

Analysts say they expect the market to remain in a wait-and-see approach for weeks as investors gauge how economic reopenings underway are going. Investors want to see if second waves of coronavirus infections occur if governments lift their restrictions on businesses too soon.

A barrel of U.S. crude oil for delivery in June rose $2.27 to settle at $27.56. Brent crude, the international standard, rose $1.94, or 6.6% to $31.13 a barrel.


AP Business Writer Yuri Kageyama contributed.