Stocks closed broadly lower on Wall Street Thursday as investors weighed more data showing the economic damage being caused by the coronavirus pandemic and another flareup in tensions between the U.S. and China.
The S&P 500 fell 0.8%, shedding some of the gains it made in a solid rally a day earlier, though it remains on track to end the week sharply higher. Bond yields were mixed. Oil prices closed higher, extending a string of gains.
Technology and health care stocks took some of the heaviest losses. Only industrial sector stocks eked out a gain. Homebuilders, meanwhile, moved broadly higher, extending the group’s solid rally this month.
“It really looks like a little bit of weakness ahead of the long holiday weekend,” said Ryan Detrick, senior market strategist for LPL Financial. U.S. markets will be closed Monday for Memorial Day.
The S&P 500 slid 23.10 points to 2,948.51. The Dow Jones Industrial Average fell 101.78 points, or 0.4%, to 24,474.12. The Nasdaq composite lost 90.90 points, or 1%, to 9,284.88. Small-company stocks, which have notched the biggest gains this week, bucked the downward trend. The Russell 2000 inched up 0.63 points, less than 0.1%, to 1,347.56.
The selling was tentative at first, but gained momentum as the day progressed. Initially, traders reacted to news that the White House had issued a report attacking China’s economic and military policies, and its human rights violations. The report expands on President Donald Trump’s get-tough rhetoric that he hopes will resonate with voters angry about China’s handling of the disease outbreak.
Meanwhile, the State Department announced that it had approved the sale of advanced torpedoes to the Taiwanese military, a move sure to draw a rebuke from Beijing, which regards the island as a renegade province.
The government's latest weekly snapshot of applications for unemployment aid didn't help. The Labor Department said more than 2.4 million people applied for U.S. unemployment benefits last week. All told, the running total of Americans who have lost their jobs in the two months since the coronavirus led to a near shutdown of the economy has climbed to 38.6 million.
Despite a week of uneven finishes, Wall Street is on track to recoup its losses from last week amid fresh hopes for a U.S. economic recovery in the second half of the year and optimism about a potential vaccine for COVID-19. A strong rally on Monday reversed all of the market’s losses for the month. The index is still down about 13% from its high in February.
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. However, concerns remain that the relaxing of stay-at-home mandates and the reopening of businesses could lead to another surge in infections, potentially ushering in another wave of shutdowns.
“Clearly we’re all going to be anticipating how things slowly start to open up to see exactly what happens with cases over the next several weeks,” Detrick said.
The National Association of Realtors said sales of previously occupied U.S. homes plunged 17.8% in April as the housing market remained hobbled by the coronavirus shutdowns. The downbeat report didn't hurt homebuilder stocks, which climbed broadly. The pullback in sales came as the inventory of properties on the market fell to a record low last month. A drop in homes for sale favors builders because it represents less competition. Meanwhile, Freddie Mac said mortgage rates eased this week, another favorable trend for builders. KB Home led the sector, gaining 5.2%.
Oil prices closed higher for the sixth day day in a row. Benchmark U.S. crude oil for July delivery rose 43 cents, or 1.3%, to settle at $33.92 a barrel. July Brent crude oil, the international standard, gained 31 cents, or 0.9%, to close at $36.06 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.
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 0.68% late Wednesday.
European stock indexes closed broadly lower after shedding some gains. Asian stock markets finished lower.