Mixed day on Wall Street
An early rally on Wall Street suddenly vanished Thursday, the latest example of how fragile are the hopes underpinning the stock market’s recovery.
The S&P 500 initially shot higher in the morning, completely brushing aside the report showing that millions of workers are losing their jobs by the week. Investors were looking ahead, beyond the current economic misery, to the prospect of a reopening economy amid expectations that the coronavirus outbreak may be leveling off in areas around the world.
But all of its gain, which topped out at 1.6%, vanished in a span of seconds following a discouraging report about a possible treatment for COVID19. After that, the S&P 500 flipped between gains and losses through the afternoon and ended the day down 0.1%.
It’s a microcosm of the extreme swings that have gripped markets for months, as investors struggle to set prices for where corporate profits and the economy will be months into the future.
Investors sent the S&P 500 skidding by a third from its record in February until a month ago, before the recession hit, on expectations that severe economic pain was on the way. Since then, the index has roughly halved its losses on a series of tenuous hopes for the future — hope that a reopening economy will allow company profits to increase, hope that aid from the Federal Reserve and Congress can temper the economic pain and hope that possible treatments for COVID19 may be on the way.
A report from the Financial Times undercut that third hope. It said an antiviral drug from Foster City’s Gilead Sciences flopped in a clinical trial, citing documents published accidentally by the World Health Organization. Gilead shares flipped from a 3.3% gain to a 4.3% loss, dragging down the market.
The S&P 500 finished at 2,797.80, down 1.51 points. The Dow Jones industrial Average rose 39.44 points, or 0.2%, to 23,515.26 after losing almost all of a 409point gain. The Nasdaq composite slipped 0.63 points to 8,494.75.
“It should be expected — even as we are optimistic, and we see signs of progress in treatment, testing and vaccines — that there’s going to be some forward and some backsliding,” said Nela Richardson, investment strategist at Edward Jones.
“The risk is that these fundamentals that we’re seeing now that are dastardly, just terrible and reflective of the economy really going into a sudden stop, last longer than what the markets currently anticipate,” she said. “That uncertainty will cause volatility, even if the overall trajectory in the market is positive.”
Energy stocks were also strong after the price of crude oil rose for a second straight day after being upended this week. Apache, Devon Energy and Halliburton all rose more than 8%, though all three also remain down at least 58% for the year.
U.S. crude oil for delivery in June rose 19.7% to settle at $16.50 per barrel. It has recovered after falling below $12 Monday, though it remains well below the roughly $60 level where it started the year. Brent crude, the international standard, rose 4.7% to $21.33 per barrel.