Stocks resumed falling in early trading on Wall Street Thursday as layoffs remain stubbornly high across the country and Congress stalls on sending aid to out-of-work Americans. The S&P 500 was 0.5% lower and now is 10% below its early September high, what market watchers call a correction. Unemployment claims rose slightly to a historically high 870,000 last week, worse than economists expected. Stocks have slumped following months of strong gains. Among the reasons behind the abrupt tumble are worries that stocks simply grew too expensive following their record-setting run through the spring and summer.
THIS IS A BREAKING NEWS UPDATE: AP’s earlier story appears below.
Global shares were mostly lower Thursday due to broad uncertainty about the economic outlook as coronavirus cases pick up again in many parts of the world.
U.S. shares looked set to drift lower, with Dow futures falling 0.1% and S&P 500 futures about flat. France’s CAC 40 fell 0.1% to 4,798 and Germany’s DAX rose 0.2% to 12,666. Britain’s FTSE 100 shed 0.3% to 5,883 after the government unveiled a new program to help some workers as a broader furlough scheme is due to expire next month.
In the U.S., market players are feeling less optimistic about action from the Federal Reserve and Congress to help the economy amid the distractions of the presidential election and the battle over the Supreme Court seat left vacant by the death of Justice Ruth Bader Ginsburg.
Risks of a broader sell-off of technology shares remain after a long due correction, said Hayaki Narita at Mizuho Bank in Singapore.
“Add to that, the growing severity of ‘second wave’ risks in Europe, with the U.K. and France seeing a worrying escalation in new cases,” in addition to flare-ups in the U.S., Canada and elsewhere, he said.
Japan’s benchmark Nikkei 225 declined 1.1% to finish at 23,087.82. Australia’s S&P/ASX 200 slipped 0.8% to 5,875.90. South Korea’s Kospi sank 2.6% to 2,272.70. Hong Kong’s Hang Seng dropped 1.8% to 23,311.07, while the Shanghai Composite gave up 1.7% to 3,223.18.
Wall Street experienced more whiplash Wednesday as stocks closed broadly lower, wiping out gains from the day before.
Apart from worries over the pandemic and politics, Big Tech stocks like Apple and Amazon have been at the center of recent market swings. They soared on expectations that their growth will only strengthen as the pandemic accelerates work-from-home and other trends favoring digitization. But they began falling early this month amid fears that they had grown too expensive.
Johnson & Johnson began a huge final study to try to prove if a single dose COVID-19 vaccine can protect against the coronavirus. A handful of other vaccines are already in final-stage studies, and investors increasingly expect one to be available within the first three months of 2021. The hope is that it can help revive the economy and spur strong growth.
Part of this week’s early stumble for stocks was due to worries about European governments imposing tougher restrictions on businesses to slow the spread of the coronavirus, which hurt travel-related companies in particular.
In energy trading, benchmark U.S. crude rose 9 cents to $40.02 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 10 cents to $42.36 a barrel.
The dollar cost 105.47 Japanese yen, up slightly from 105.38 yen late Wednesday. The euro was trading at $1.1639, down somewhat from $1.1660.