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Monday August 2nd, 2021 10:26AM

Stocks edge lower as investors seek direction amid recovery

By The Associated Press
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Stocks edged lower in morning trading on Wall Street Tuesday while investors continue to search for direction as the economy recovers from its pandemic slump.

The S&P 500 fell 0.4% as of 11:26 a.m. Eastern. The Dow Jones Industrial Average fell 163 points, or 0.3%, to 34,466 and the Nasdaq fell 0.3%.

Banks were among the biggest drag on the market as bond yields, which banks rely on to charge more lucrative interest rates on loans, slipped. The yield on the 10-year Treasury fell to 1.53% from 1.57% late Monday. Bank of America fell 1.1% and Citigroup fell 1.7%.

Health care companies also fell. Johnson & Johnson slipped 1.6%.

A variety of companies that rely on direct consumer spending made solid gains. Domino's Pizza rose 3.2% and Gap rose 2.2%.

The stock of Fastly, an internet cloud services provider, was 4.1% higher after the company said it had addressed an internal problem that caused dozens of websites around the globe to go down briefly, including the home page of Britain’s government and The New York Times.

“We’re kind of stuck in the summer lull,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “Week by week we’re going to go through periods where people are waiting for the latest economic data report.”

Investors have been navigating a choppy market as they digest information on how the economy is recovering. The World Bank upgraded its outlook for global growth this year, predicting that COVID-19 vaccinations and massive government stimulus in rich countries will power the fastest worldwide expansion in nearly five decades. The 189-country anti-poverty agency forecasts that the world economy will grow 5.6% this year, up from the 4.1% it forecast in January. The global economy last year shrank 3.5%.

The upbeat forecasts for growth and greater demand from consumers have raised concerns about rising inflation. Investors have been trying to gauge whether the increase will be temporary and tied to the recovery or will run hot and become a more permanent fixture of the post-pandemic economy. The path of inflation could determine whether central banks continue to generously support economies or pull back.

The economy is still being distorted by the pandemic and its aftermath. Factories are still ramping up production, but it's simply not quick enough to meet demand for a wide range of goods as people move past the pandemic. That has resulted in prices on everything from food to household staples rising.

“Right now it’s just too many consumers taking too few goods,” Horneman said.

Elsewhere in the market, Wendy's jumped 16.3% as it seemingly joined a list of companies that have gained the attention of a group of highly active individual investors. Clover Health Investments soared 55.6%. Other companies that have seen their stock values soar and fall sporadically include AMC Entertainment, Blackberry and GameStop.

European markets were mixed and markets in Asia were lower.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets
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