Wall Street scuffles as worsening pandemic slows its rally

NEW YORK — U.S. stocks are scuffling Thursday amid worries about worsening coronavirus counts across the country.

The S&P 500 was 0.2% lower in morning trading, a rare stumble in what’s been a banner month for the benchmark index. The Dow Jones Industrial Average was down 109 points, or 0.4%, at 28,288, as of 10:40 a.m. Eastern time, while the Nasdaq composite was ticking 0.5% higher.

Markets around the world are taking a pause after galloping higher this month, at first on expectations that Washington will continue several pro-business policies following last week’s U.S. elections. More recently, encouraging early results for a potential COVID-19 vaccine have investors envisioning a global economy returning to normal.

Analysts are still largely optimistic the market can climb even higher, largely because they see a potential vaccine as a game changer. The S&P 500 and Dow are both close to their record highs. But several risks remain that could trip up markets in the near term. Rising above them all is the continuing pandemic, with daily counts climbing in nearly every state across the country.

The trends are worsening enough in New York, for example, that the state is ordering restaurants, bars and gyms to close at 10 p.m. each night, beginning Friday. New York had been a hotbed for the virus early in the year but had seemed to have gotten it largely under control. In Europe, several governments have brought back even tougher restrictions that will likely restrain the economy.

“From a health standpoint and economic standpoint, the very near term looks relatively bleak,” said Mike Dowdall, investment strategist with BMO Global Asset Management.

But while he says more volatility may hit the market in the near term as governments bring back restrictions, he’s still optimistic about its prospects into next year.

“If you think back to the dark days of March, you didn’t know how far we were from normalization,” he said. “People were saying it may be years. But the backdrop from a markets standpoint is just a lot different than it was in March.”

Beyond the vaccines in development, which could get everyday life closer to normal, he cited the Federal Reserve, which has already shown it can roll out bond-buying programs swiftly to support markets.

Thursday’s slip for the S&P 500 pares its gain for November down to 9.1%. If it holds there, it would still be the best month for the benchmark index since April, when the market was first exploding out of the crater created by the market’s sell-off amid pandemic panic.

Big Tech stocks were holding up better than the rest of the market, much as they have throughout the pandemic. Investors see them as able to grow their profits regardless of whether lockdowns are weighing on the economy. Microsoft rose 1.1%, and Facebook gained 0.8%.

Several of the stocks that would benefit most from an economy returning to normal, meanwhile, were lagging.

Financial stocks in the S&P 500, whose profits are more closely tied to the strength of the economy than Big Tech, fell 1.3% for one of the largest losses among the 11 sectors that make up the index. Cruise operator Carnival fell 3% for one of the larger losses in the index.

A report on Thursday showed that the number of layoffs across the country remains incredibly high, though it again eased by a bit. Last week, 709,000 workers filed for unemployment benefits, down from 757,000 a week earlier. It was also a better reading than economists were expecting.

But economists caution that the numbers could climb again if coronavirus counts keep rising across the country and trigger more business closures.

A separate report showed that inflation at the consumer level was weaker last month than economists expected.

Following the reports, Treasury yields slipped. The yield on the 10-year Treasury fell to 0.91% from 0.94% late Tuesday. Trading for U.S. government bonds was closed Wednesday for Veterans Day.

In European stock markets, the French CAC 40 fell 1.4%, and Germany’s DAX lost 1.2%. The FTSE 100 in London dropped 0.8% after data showed the economy slowed in September following strong growth in the summer. That bodes ill for the autumn, when new restrictions on businesses were imposed.

In Asia, Japan’s Nikkei 225 rose 0.7% but other indexes were weaker. South Korea’s Kospi lost 0.4%, Hong Kong’s Hang Seng dipped 0.2% and stocks in Shanghai slipped 0.1%.

Chinese technology shares have taken a beating this week, losing about $290 billion in market capitalization after the government issued new proposed anti-trust regulations for digital industries, said Jeffrey Halley of Oanda.

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AP Business Writer Elaine Kurtenbach contributed.