Stocks are off to a weak start on Wall Street as investors got little encouragement from the latest reports highlighting the damage the coronavirus lockdowns have been inflicting on the economy. The S&P 500 index fell 0.5% in early trading Thursday. Bond yields fell. The U.S. economy shrank at a 5.0% rate in the first quarter, but a much worse decline is expected in the current three-month period. Also another 1.5 million laid-off workers applied for unemployment benefits last week, however that’s the 12th straight drop and a sign that layoffs are slowing but are still at a painfully high level.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
World shares and U.S. futures mostly slipped Thursday as investors focused on surging new coronavirus cases in the U.S. that are dimming hopes for a relatively quick economic turnaround from the pandemic downturn.
Dow futures were down 0.4% and those for the S&P 500 were off 0.3%, pointing to losses on the open on Wall Street. After broad losses in Asia, markets were somewhat more stable in Europe. London’s FTSE gave up 0.1% to 6,120, while Germany's DAX rose 0.4% to 12,142. The CAC 40 in Paris picked up 05% to 4,894.
A rise in new infections is stoking worries that reopenings of businesses closed earlier to fight the pandemic may have to be curtailed, despite indications that economies are recovering from lockdowns that are being eased in the U.S. and other countries.
“Financial markets had the chance to reassess some of the great expectations that have underlined the asset price rally since Mid-March," Jeffrey Halley of Oanda said in a report.
Talk of reimposing shutdowns in the U.S. has gotten investors' attention, he said. “More concerning for the U.S., is that this is not even the dreaded ‘second wave' of infections, merely an ongoing evolution of the first one."
Tokyo's Nikkei 225 slipped 1.2% to 22,259.79 and the Kospi in Seoul lost 2.3% to 2,112.37. India’s Sensex lost 0.8% to 34,591.33.
Markets in Hong Kong, Taiwan and Shanghai were closed for holidays. Australia's S&P/ASX 200 sank 2.5% to 5,817.70 after its biggest airline, Qantas, announced it plans to cut at least 6,000 jobs and keep 15,000 more workers on extended furloughs to survive the coronavirus pandemic.
On top of lingering concerns over trade tensions between the U.S. and China, reports said the White House is considering fresh tariffs on $3.1 billion worth of exports from France, Germany, Spain and Britain. That helped send markets tumbling on worries that such a move might spiral into another trade war, said Jingyi Pan of IG.
Despite shedding its gains for June, the S&P 500 still is on pace for its best quarter since the fourth quarter of 1998.
The market had been mostly in rally mode since April as investors focused on the prospects for an economic turnaround as broad areas of the economy reopened. But the recent surge in new infections has undercut that optimism.
While early hot spots like New York and New Jersey have seen cases steadily decrease, the virus is slamming the south and west, with several states setting single-day records, including Arizona, California, Mississippi, Nevada and Texas.
The yield on the 10-year Treasury note fell to 0.67% from 0.69% late Wednesday. It tends to move with investors’ expectations for the economy and inflation.
In energy trading, benchmark U.S. crude oil fell 47 cents to $37.54 per barrel in electronic trading on the New York Mercantile Exchange. It slid 5.8% to settle at $38.01 a barrel on Wednesday.
Brent crude, the international standard, gave up 31 cents to $40.22 per barrel. It fell 5.4% to close at $40.31.
In currency dealings, the dollar bought 107.27 Japanese yen, rising from 107.05 yen. The euro slipped to $1.1207 from $1.1252.