Tuesday, August 04, 2020

Stocks drop after 5-day rally; dollar gains

Jul 08. 2020
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By  Syndication Washington Post, Bloomberg · Claire Ballentine · BUSINESS 

U.S. stocks slumped, with airlines and hotels particularly hard hit, amid signs that the world economy has a long way to go to get back on track.

Almost six shares fell on the S&P 500 Index for every one that gained. The tech-heavy Nasdaq gauges dropped from a record intraday high in the afternoon as heavyweights such as Amazon.com Inc. and Microsoft Corp. turned lower. European shares slipped on concern the economy will take longer to recover.

Gold climbed to the highest since 2011. The dollar strengthened and Treasury yields dipped. Brazil's currency and stocks slumped as President Jair Bolsonaro said he had tested positive for Covid-19.

Stock investors took a breather after a ferocious rally that fueled the S&P 500's best winning streak this year. While data show the global economy may be past the worst of the slump, it's a long road back to pre-crisis levels. Federal Reserve Bank of Atlanta President Raphael Bostic said the renewed spread of coronavirus may threaten the pace of the recovery as businesses and consumers put plans on hold.

After "a five-day rally where the market's up quite a bit, it's not so surprising to have a little bit of a pause," said Jeff Mills, the chief investment officer at Bryn Mawr Trust Co. "It's just sort of the natural movements of the market. You can't go up in a straight line every single day."

The European Commission gave its starkest warning yet about the impact of the pandemic. Officials now forecast a contraction of 8.7% in the euro area this year, a full percentage point deeper than previously predicted. Novavax Inc. surged after it was awarded $1.6 billion in U.S. funding to support large-scale manufacturing of its vaccine candidate.

Elsewhere, most Asian shares dropped, even as Chinese stocks powered ahead for a sixth day, although at a slower pace. The offshore yuan briefly strengthened through the 7 per dollar level for the first time since March.

These are the main moves in markets:

Stocks

- The S&P 500 Index fell 1.1% as of 4 p.m. EDT.

- The Stoxx Europe 600 Index sank 0.6%.

- The MSCI Asia Pacific Index declined 0.7%.

- The MSCI Emerging Market Index decreased 0.9%.

Currencies

- The Bloomberg Dollar Spot Index gained 0.4%.

- The euro decreased 0.3% to $1.1274.

- The British pound rose 0.4% to $1.2543.

- The Japanese yen weakened 0.2% to 107.55 per dollar.

Bonds

- The yield on 10-year Treasurys dipped four basis points to 0.64%.

- Germany's 10-year yield was little changed at -0.43%.

- Britain's 10-year yield sank two basis points to 0.18%.

Commodities

- West Texas Intermediate oil fell 0.8% to $40.32 a barrel.

- Gold rose 0.7% to $1,796.73 an ounce.

 

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