The S&P 500 and Dow dropped on Thursday as investors worried about another round of business shutdowns to contain a surge in coronavirus cases and began to shift their focus to earnings, while the Nasdaq hit another record closing high. The TSX also fell, weighed down by declining oil prices and energy equities.
The United States saw more than 60,000 new COVID-19 infections on Wednesday, setting a single-day global record while Florida and Texas reported a record one-day increase in deaths.
Investors also began to turn their focus to the second-quarter earnings season, which shifts into higher gear next week. S&P 500 companies are expected to post a more than 40% decline in year-over-year earnings, which would be the biggest quarterly profit drop since the 2008 financial crisis, based on IBES data from Refinitiv.
Walgreens Boots Alliance Inc shares dropped after it reported a quarterly loss compared with a profit a year earlier, hurt by non-cash impairment charges of $2 billion as COVID-19 disrupted business at its Boots UK division. Its stock closed 7.8% lower.
“We’re heading into earnings season, and you’re seeing some troubling trends,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
“I expect a lot of confusing numbers and guidance. COVID is certainly not behind us in any way, shape or form, so maybe the V gets elongated some,” he said.
The Nasdaq registered its fifth record closing high in six days, helped by gains in Amazon.com, Microsoft Corp , Nvidia, Apple Inc. Also, Tesla extended recent gains, ending up 2.1%.
The Dow Jones Industrial Average fell 361.19 points, or 1.39%, to 25,706.09, the S&P 500 lost 17.89 points, or 0.56%, to 3,152.05 and the Nasdaq Composite added 55.25 points, or 0.53%, to 10,547.75.
The benchmark S&P 500 is still up more than 40% from its March 23 closing low.
Helping stocks early in the day was data showing the number of Americans filing for jobless benefits dropped to a near four-month low last week. A record 32.9 million people though were collecting unemployment checks in the third week of June.
A batch of upbeat economic data including the record pace of job additions in June has underscored that the stimulus-fueled domestic economy was on the path to recovery.
In a bullish signal for near-term momentum, the benchmark S&P 500′s chart formed a “golden cross” pattern, in which its 50-day moving average vaulted above the 200-day moving average.
The S&P/TSX Composite Index closed down 60.55 points, or 0.39%, at 15,568.64. The energy sector led decliners with a 2% drop, as oil prices tumbled about US$1 a barrel amid worries that renewed lockdowns to contain the spread of coronavirus in the United States would again sink fuel consumption.
Brent crude futures fell 94 cents, or 2.2%, to settle at $42.35 a barrel, after gaining 0.5% on Wednesday. U.S. West Texas Intermediate (WTI) crude futures fell $1.28, or 3.1%, to settle at $39.62 a barrel.
“As the U.S., Brazil and other countries continue to get hammered by COVID-19, demand is at stake,” said Louise Dickson, oil markets analyst at Rystad Energy.
The fresh surge has prompted states such as California and Texas to reimpose some restrictions. The renewed orders are likely to dent any sustained recovery in fuel demand. Data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts expected, as demand hit its highest level since March 20.
In storage hub Cushing, Oklahoma, crude stockpiles rose around 2 million barrels in the week to Tuesday, traders said, citing a Thursday report from Genscape.
In India, fuel demand fell 7.9 percent in June compared with the same month last year, denting market sentiment further on Thursday.
“The Indian demand numbers were disappointing,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “That didn’t fit the narrative we were hearing that India’s economy was bouncing back.”
Still, futures have held around $40 a barrel and some analysts expect prices to hold in a range ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Elsewhere, gold prices retreated on Thursday, a day after vaulting to nearly nine-year highs, as investors embraced the safe-haven greenback in the face of record U.S. coronavirus cases.
Spot gold fell 0.6% to $1,799.23 per ounce by 1:36 p.m. ET, having surged to its highest since September 2011 at $1,817.71 on Wednesday. U.S. gold futures settled down 0.9% at $1,803.8.
“Gold has been overbought quite a bit after it surpassed the $1,800 level and now we are seeing some investors selling off,” said Edward Meir, analyst at ED&F Man Capital Markets.
Read more: Stocks that saw action Thursday - and why
Reuters, Globe staff
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