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Friday, October 30, 2020
Business US stocks bounce higher, but still end the week with a loss

US stocks bounce higher, but still end the week with a loss

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By ALEX VEIGA and DAMIAN J. TROISE AP Business Writers
Stocks closed another bumpy day with solid gains on Wall Street, but not enough to erase its worst weekly loss since late March. The S&P 500 rose 1.3% Friday, a day after dropping nearly 6%. The volatility interrupted what had been a dramatic rally for the market over the past three weeks. Stocks turned wobbly this week as investors re-evaluated their expectations for economic growth, which many skeptics have been saying were overly optimistic. Small-company stocks and bond yields rose, meaning investors were a bit more willing to take on risk again a day after the heavy market rout.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Stocks moved higher on Wall Street in afternoon trading Friday, recouping some of their losses a day after the market had its biggest rout since mid-March.

The S&P 500 was up 0.7% a day after dropping 5.9%. The benchmark index is still headed for a weekly loss following three weeks of solid gains. Small-company stocks and bond yields moved broadly higher, signs that pessimism about the economy was easing.
Gains by technology, financial and real estate stocks outweighed losses in utilities and companies that rely on consumer spending. Companies that were among the biggest losers Thursday were big gainers, including airlines and cruise lines.
The rebound for stocks is a reversal for the market, which sold off for three days in a row as a rise in COVID-19 cases in the U.S. and a discouraging economic outlook from the Federal Reserve dashed investor optimism for a quick economic recovery as states lift stay-at-home orders and businesses reopen.

“Yesterday was the market taking a needed breath and saying ‘OK, this is probably going to take more time than we were expecting,” said Willie Delwiche, investment strategist at Baird. “Today, it’s ‘maybe we overreacted yesterday.'”

Optimism that the reopening of the economy would be relatively quick once the restrictions put in place to stem the spread of the outbreak eased helped power the stock market’s red-hot comeback since late March. However, it’s unclear if Thursday’s market sell-off reflected a fundamental reassessment of the economic outlook or a one-off drop as traders cashed in on the market’s recent gains.
“We will continue to see volatility across the markets, as there is plenty of uncertainty on what the reopening of the U.S. economy looks like,” said Julie Fox, northeast private wealth market head at UBS Financial Services.

The comeback rally lost some of its early strength as the day went on. The Dow Jones Industrial Average was up 192 points, or 0.8%, to 25,335. It had been up more than 800 points in the early going.
The Nasdaq, which climbed above 10,000 points for the first time on Wednesday, was up 0.2%. The Russell 2000 index of smaller companies was up 4%. European markets closed mostly higher. Asian markets ended broadly lower.

Bond yields headed broadly higher, a sign that pessimism about the economy was ebbing. The yield on the 10-year Treasury yield rose to 0.69% from 0.65% late Thursday.
Investors have been balancing optimism about the reopening of the economy against the possibility that the relaxing of restrictions will lead to a surge in new coronavirus infections and fatalities. Cases are climbing in nearly half the states, according to an Associated Press analysis, a worrying trend that could intensify as people return to work and venture out during the summer.

Despite the uncertainty, stocks have mounted a historic comeback the past couple of months, with the S&P 500 rallying 44.5% between late March and Monday, erasing most of its losses tied to the pandemic.

The swiftness and strength of the market’s recovery set the stage for the three-day run of selling for stocks this week, said Barry Bannister, head of institutional equity strategy at Stifel.
“The market itself was like a fever and yesterday’s break was like a fever breaking,” he said. Bannister said investors should wait for more certainty about the economic recovery, rather than “chasing this rally.”
Oil prices ended mixed. Benchmark U.S. crude oil for July delivery fell 8 cents to settle at $36.26 a barrel. Brent crude oil for August delivery rose 18 cents to close at $38.73 a barrel.
France’s CAC 40 in Paris rose 0.5%, while Germany’s DAX lost an early gain and fell 0.2%. Britain’s FTSE 100 gained 0.5%, recovering from early losses on news that the British economy contracted by 20.4% in April, wiping out nearly two decades worth of growth.

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