U.S. stocks finished mixed Friday as Wall Street shook off an early slide, closing out a solid week of gains for the market.
Only the Dow was the only index down slightly by the end of trading.
The S&P 500 index inched up 0.2% after having been down 0.5%. It ended the week with a 3.2% gain, largely due to a big rally on Monday that offset all of the benchmark index’s losses from earlier in the month.
Strength in technology, communications and real estate stocks helped reverse much of the market’s early slide. Energy stocks fell the most as crude oil prices closed lower after six straight gains. Bond yields were mixed. Trading was choppy for much of the day ahead of the long holiday weekend. Markets in the U.S. will be closed Monday for Memorial Day.
Fresh hopes for a U.S. economic recovery in the second half of the year and optimism about a potential vaccine for COVID-19 helped spur stocks higher for much of the week. Investors are betting that the economy and corporate profits will begin to recover from the coronavirus pandemic as the U.S. and countries around the world slowly open up again.
Traders remain wary, however, that the reopening of businesses could lead to another surge in infections, potentially hobbling efforts to get the nation’s battered economy growing again.
“We’re in a bit of a hold right now looking for the next catalyst,” said Brian Levitt, global market strategist at Invesco. “There’s still an awful lot of uncertainty we have to work though.”
The S&P 500 rose 6.94 points to 2,955.45. The index is still down 12.7% from its all-time high in February. The Dow Jones Industrial Average slipped 8.96 points, or less than 0.1%, to 24,465.16. The Nasdaq composite added 39.71 points, or 0.4%, to 9,324.59.
Despite the uneven finish, the three major stock indexes each ended the week more than 3% higher. Those gains were blown away by the rally in small company stocks, which drove the Russell 2000 index 7.8% higher for the week, a bullish signal suggesting that investors expect that the economy is on the path to recovery. On Friday, the Russell 2000 gained 7.97 points, or 0.6%, to 1,355.53.
Fears of a crushing recession due to the coronavirus sent the S&P 500 into a skid of more than 30% from its high in February. Hopes for a relatively quick rebound and unprecedented moves by the Federal Reserve and Congress to stem the economic pain drove a historic rebound for stocks in April and have bolstered optimism that the market won't return to the depths its experienced in March.
Investors are now keenly focused on the process of reopening the U.S. economy, which is likely to continue accelerating as the summer progresses.
“The markets are expecting a reasonable resumption of economic activity, a manageable increase in coronavirus cases and a manageable situation when it comes to our health care system,” said Mike Zigmont, head of trading and research at Harvest Volatility Management. "If we have a second freezing of the economy, then this market is grossly overvalued and the only people that are right now are the bears.”
Wall Street opened mostly subdued Friday, spooked by China’s aggressive moves to exert more control over Hong Kong.
As Americans looked forward to a respite from the pandemic with the upcoming Memorial Day weekend, stocks slipped after communist leaders in China proposed legislation that could limit opposition activity in the former British colony.
For now, flaring tensions between the U.S. and China over Hong Kong and other issues appear to have eclipsed optimism over moves to reopen many economies stalled by the coronavirus pandemic.
The latest ripples added up to a weak open on Wall Street.
This week has seen more gloomy news on job losses, with the U.S. Labor Department saying the number of people thrown out of work since the virus struck has climbed to nearly 39 million. Japan reported week trade figures and economic activity in Europe continued to shrink rapidly
The latest on oil
Oil prices fell, snapping a six-day winning streak. Benchmark U.S. crude oil fell 2% to settle at $33.25 a barrel. Brent crude oil, the international standard, fell 2.6% to settle at $35.13 a barrel.
Crude oil started the year at about $60 a barrel, but plummeted earlier this year as demand sank due to widespread travel and business shutdowns related to the coronavirus. The price has risen this month as oil producing nations cut back on output and the gradual reopening of economies around the globe have driven up demand.
The situation in China
China’s National People’s Congress opened its annual session in Beijing and Premier Li Keqiang delivered a work report that promised 2 trillion yuan ($280 billion) in support for local governments to help them fight the pandemic and create jobs as the country struggles to revive growth.
Li told the gathering that Beijing would set no economic growth target in order to focus on fighting the disease. He warned that the battle against the pandemic isn’t over and urged the country to “redouble our efforts” to revive the economy.
Beijing’s move to take over long-stalled efforts to enact national security legislation in semi-autonomous Hong Kong spooked investors who have endured months of pro-democracy demonstrations last year that at times descended into violence between police and protesters.
The proposed bill is aimed at forbidding secessionist and subversive activity, as well as foreign interference and terrorism. Such proposals are certain to be approved by the largely ceremonial parliament.
“Traders around the world are playing the waiting game to see details of the new Hong Kong law to gauge how severe the terms are,” Stephen Innes of AxiCorp said in a commentary.
More specifically, he said, attention is on the U.S. response to the possible impact on Hong Kong’s special economic status. Under the terms of Britain’s handover of control of the territory to Beijing, the city kept its own trade regime and finances and a legal system based on western-style civil liberties not enjoyed elsewhere in China.
The proposal, one of the most controversial items on the Chinese legislative agenda in years, has drawn strong rebukes from the U.S. government and rights groups. On Thursday, the White House issued a report attacking Beijing’s economic policies and human rights violations, expanding on get-tough rhetoric President Donald Trump expects to resonate with voters ahead of the election in November.
Asia and elsewhere
Hong Kong’s Hang Seng index sank 5.6% to 22,930.14 and the Shanghai Composite index dropped 1.9% to 2,813.77.
Elsewhere in Asia, Japan’s Nikkei 225 index fell 0.8% to 20,388.16 despite a pledge from the Bank of Japan to devote $280 billion to banks for financing small and medium-size businesses battling economic hardships brought on by the coronavrius pandemic. The central bank said it will start providing the zero-interest, unsecured loans in June, expanding earlier stimulus measures.
In South Korea, the Kospi lost 1.4% to 1,970.13, while Australia's S&P/ASX 200 declined 1% to 5,497.00.
India’s Sensex declined 1.2% after the central bank cut the benchmark interest rate to 4%, the lowest level in a decade, as its governor forecast the economy would fall into a contraction this year.
Germany’s DAX shed 0.3% to 11,028 while the CAC 40 in Paris lost 0.2%, to 4,425. Britain’s FTSE 100 skidded 0.8% to 5,969.
Bonds yields were mixed. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, fell to 0.66% from 0.67% late Thursday.
The dollar fetched 107.46 Japanese yen, down from 107.63 yen on Thursday. The euro weakened to $1.0903 from $1.0950.
— Compiled and edited by ArLuther Lee for The Atlanta Journal-Constitution.
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