Stocks gave up an early gain and turned lower on Wall Street in late morning trading Tuesday. Markets had gotten off to a strong start as nations and some U.S. states move toward reopening their economies from lockdowns made to restrict the spread of the coronavirus.
Technology and health care stocks led the way lower.
European stocks rose following a mixed performance in Asia. The price of U.S. oil remained wild, and 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 speed, but the removal of restrictions would allow businesses to get back into some type of gear, even if it’s only first, after the global economy essentially slammed to a halt.
The S&P 500 fell 0.3% in late morning trading, having given up an early gain of 1.5%. The Dow Jones industrials fell 0.2% and the tech-heavy Nasdaq fell 1.1%. Small-company stocks, which have lagged the rest of the market this year, rose slightly.
Companies that would benefit most from people being able to leave their houses again were among the market’s leaders. 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.
Still, signs of caution are prevalent throughout the market. Many professional investors have been skeptical of the stock market’s big rally, with the S&P 500 up close to 30% since hitting a low late last month. Premature reopenings of economies could cause another wave of coronavirus infections.
Skeptics are also wary of how quickly stocks have rebounded, nearly as sharply as they plunged 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.
Merck reported a jump in revenue and profit for the first quarter, but the drugmaker also cut its financial forecast for the full year. It said prescription drug sales will likely fall because because the pandemic is keeping many patients with chronic conditions away from their doctors. It’s also looking for sales of veterinary medicines to dip. Its shares fell 3.1%.
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 in the morning. 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.
Worries persist about new surges of coronavirus cases in places like China and South Korea, where they had declined as a result of social distancing, testing and arduous efforts by medical workers.
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 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.
AP Business Writer Yuri Kageyama contributed.