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Wall Street’s rally faded in the final minutes of trading Tuesday as losses in health care companies and big tech titans offset gains elsewhere.
The Dow Jones Industrial Average slipped 32 points to close at 24,101.55, snapping a four-day winning streak. The Standard & Poor’s 500 fell 0.5% to end at 2,863.39, after two straight days of gains. Both averages were within 20% of their February records after slumping into a bear market in March.
Stocks that have held up the best through this year’s sell-off were down the most sharply on Tuesday. They included health care companies, big tech giants and winners of the stay-at-home economy such as Netflix and Amazon.
A slew of corporate earnings announcements is lined up for this week. Nearly a third of the companies in the S&P 500 are scheduled to report how profitable, or otherwise, they were in the first three months of 2020 and, more importantly, perhaps talk about how they see future conditions shaking out. That includes the Big Five of Amazon, Apple, Facebook, Microsoft and Google’s parent, Alphabet, which together make up about a fifth of the index.
“Investors seem to be taking profits going into earnings calls on some of the high-flying tech stocks,” says Jimmy Lee, CEO and founder of Wealth Consulting Group. “They’ve gone up so much so quickly. It makes sense to take less risk going into the earnings calls and waiting to see what happens.”
On the winning side were shopping-mall owners, travel companies and other businesses that got hammered after widespread stay-at-home orders locked their customers away.
Companies are watching as politicians detail plans to ease up on restrictions that were meant to slow the coronavirus pandemic but also have erased businesses and jobs. Texas, Ohio and other states have taken steps to ease lockdown restrictions and reopen their economies. Mississippi, Tennessee and Colorado began to permit some businesses to reopen Monday.
With central banks and governments promising huge amounts of aid for the economy, some investors are focusing on the potential return of growth as the outbreak levels off in some areas.
To be sure, analysts say recent gains could be limited until investors get more clarity on finding treatments for the deadly virus. The coronavirus had killed almost 214,000 people globally as of Tuesday afternoon, according to Johns Hopkins University data, with more than 3 million confirmed cases worldwide. As of Tuesday afternoon, the U.S. had reported more than 1 million confirmed cases with more than 57,200 deaths.
“The question continues to be how long will this virus be with us and when can all businesses reopen,” Bruce Bittles, chief investment strategist at Baird, said in a note. “A positive economic forecast centers on the development of a virus vaccine and/or promising treatments. Additionally, we need to see a successful reopening of the economy state by state and a return to single-digit unemployment rates.”
The Federal Reserve began a two-day meeting Tuesday, but economists don’t expect it to add to the huge amounts of stimulus it has already deployed. The European Central Bank will hold its own meeting Thursday, and is likewise expected to mainly fill in details of its stimulus programs, or possibly tweak them, as it keeps an eye on a historic plunge in the economy.
“The evolution, duration and impact of COVID-19 remain unknown,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said in a note. “A COVID-19 vaccine is critical. Until we have that, conditions will not be normal.”
Inflation recently has gotten weighed down by a plunge in oil prices. With airplanes, autos and factories around the world idled, demand has collapsed for energy, and producers have not cut back quickly enough. All the extra oil has flowed into storage tanks, which are close to hitting their limits.
A barrel of U.S. oil for delivery in June fell 44 cents, or 3.4%, to settle at $12.34 in volatile trading. It dropped as low as $10.07 earlier in the morning. Brent crude, the international standard, fell 34 cents, or 1.5%, to $22.75 a barrel.
In Europe, France’s CAC 40 gained 1.4% while Germany’s DAX rose 1.3%. Britain’s FTSE 100 gained 1.9%. Japan’s benchmark Nikkei 225 edged 0.1% lower. South Korea’s Kospi gained 0.6%, and Hong Kong’s Hang Seng rose 1.2%.
Contributing: The Associated Press
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