By Stan Choe and Damian J. Troise
Major U.S. stock indexes gave up solid gains on Wall Street Tuesday in another day of sharp reversals for the market.
Health care companies, big tech titans and other stocks that have held up well through the market’s recent sell-off had some of the biggest losses in midday trading. That helped erase an early gain of 1.5% in the S&P 500 index.
Companies that stand to benefit the most when economies around the world eventually reopen fared better. Owners of shopping malls, cruise-ship operators and other companies that rely on customers leaving their houses had the biggest gains. Those companies have been getting hit the hardest in recent weeks.
All the washing around left U.S. stock indexes mixed at lunchtime. The S&P 500 was little changed, while the Nasdaq, which is dominated by big tech stocks and has held up the best through the sell-off, was down 0.9%.
The Russell 2000 of small-cap stocks, which were beaten up more than the rest of the market earlier this year on concerns about their financial strength, climbed 1.1%.
The Dow Jones Industrial Average edged up 63 points, or 0.3%, to 24,208. It had been up as many as 378 points earlier, but it and other indexes gave back much of their gains after a report showed U.S. consumer confidence fell to its lowest level in nearly six years.
European stocks were also strong, following a mixed showing in Asian markets. The price of U.S. oil remained wild, though, and it swung through more extremes as storage tanks come closer to hitting their limits.
With massive aid in place for the economy from central banks and governments, stocks have been building higher in recent weeks on anticipation that stay-at-home orders will gradually lift. U.S. states and nations around the world are going at their own speeds.
“Investors are taking that as a positive sign," Katie Nixon, chief investment officer at Northern Trust Wealth Management, said of the pledged of aid and gradual moves to lift economic restrictions.
Harley-Davidson jumped 8.3% after laying out plans to slash costs and preserve cash, including a cut of its dividend and a halt to its stock buyback program. Norwegian Cruise Line rose 6.6%, and Kimco Realty, which owns shopping centers, added 6.9%
In a sharp turnaround from earlier in the sell-off, companies that have been winners in the new stay-at-home economy lagged behind the rest of the market. Netflix, which has set record highs recently, slipped 3.3%. Clorox, whose disinfecting wipes have seen a surge in demand, was close to flat.
Signs of caution are prevalent throughout the market. Many professional investors are wary of the stock market’s big rally, which has driven the S&P 500 up nearly 30% since hitting a low late last month. The premature reopening of economies could cause another wave of coronavirus infections.
“That would really scare investors and spook the market,” Nixon said.
In another worrying sign, stocks have risen nearly as fast as they fell on the way down. The economy likely won’t have such a quick rebound, and the recovery may drag along for a while as people remain slow to get back to “normal” life and shopping patterns. That disconnect could cause a reckoning later on.
Treasury yields, which had sent warning signals about the disastrous economic effects of the pandemic long before the stock market did, were down slightly.
The yield on the 10-year Treasury dipped to 0.62% from 0.65% late Monday. Yields tend to fall when investors are downgrading expectations for the economy and inflation.
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 6% to $12 a barrel. It had dropped as low as $10.07 earlier. Brent crude, the international standard, fell 0.7% at $22.88 per barrel.
In Europe, France’s CAC 40 gained 1.1% while Germany’s DAX rose 1%. Britain’s FTSE 100 gained 1.5%.
Japan’s benchmark Nikkei 225 edged 0.1% lower. A day before, it surged after Japan’s central bank lifted its ceiling on purchases of government bonds and other assets that it uses to pump more cash into the economy.
“Basically, the monetary spigots are wide open,” said Robert Carnell, regional head of research, Asia Pacific, at ING.
South Korea’s Kospi gained 0.6%, and Hong Kong’s Hang Seng rose 1.2%.
The U.S. Federal Reserve is holding its own monetary policy meeting Tuesday and Wednesday, though it is not expected 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.
Nearly a third of the companies in the S&P 500 are scheduled to report their results for the first three months of 2020 and, more importantly, perhaps talk about how they see future conditions shaking out. That includes Amazon, Apple, Facebook, Microsoft and Google’s parent, Alphabet, which together make up about a fifth of the index.
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AP Business Writer Yuri Kageyama contributed.
