Stocks decline after reaching covid crash high

U.S. stocks declined after the S&P 500 briefly touched the highest level since the coronavirus pandemic sent markets tumbling worldwide in March. Crude oil also turned lower.

The main U.S. equity index stumbled in afternoon trading on signs the virus was throttling reopening plans in states like California. An increase in tensions with China also damaged sentiment. The measures had almost reclaimed a gain for the year before stumbling. It's still down almost 7% from a Feb. 19 high.

The volatility in the S&P also corresponded with prices swings in Tesla Inc., which is in the Nasdaq Composite. The Nasdaq hit another record high before closing in the red. The Dow Jones industrial average finished the day slightly higher.

"It's remarkable how optimistic investors seem to be," said John Carey, portfolio manager at Pioneer Investment Management. "But there are a lot of uncertainties remaining and it's a little bit early to assume it's going to be back to business as usual anytime soon."

Traders are awaiting reports this week from a slew of companies that have yet to provide concrete guidance on the impact of the virus. Shares of PepsiCo Inc. rose after the snack-maker reported stronger-than-expected second-quarter sales.

European stocks rose with government bond yields. Oil declined ahead of an OPEC+ meeting at which the group may announce plans to start tapering historic production cuts.

With global stocks trading near their highest since February, the focus has turned to whether the profit outlook will back up bullishness fueled by central bank and fiscal policy support. Traders have largely shrugged off new coronavirus outbreaks in some parts of the world. California's two biggest school districts said they would offer remote learning only in the fall despite calls by the Trump administration for classrooms to fully reopen. The state reported a record number of people hospitalized with coronavirus.

There's reason for optimism even though earnings are estimated to have contracted by more than 40% in the worst quarter since the financial crisis, as analysts upgrade their forecasts for the rest of the year.

"The backdrop is positive for all sectors of the market," said Gerry Sparrow, president of Sparrow Capital Management Inc. "The reason for that backdrop is that the recovery has taken hold, so jobs data, consumer credit, home building strength signaled that the economy has shifted in a positive direction."

These are the main moves in markets:

Stocks

The S&P 500 Index dipped 0.9% to 3,155.35 as of 4 p.m. EDT.

The Dow Jones industrial average was little changed at 26,086.34, the highest in a week.

The Nasdaq Composite Index dipped 2.1% to 10,390.84, the largest decrease in more than two weeks.

The MSCI All-Country World Index decreased 0.3% to 540.26.

Currencies

The Bloomberg Dollar Spot Index rose 0.1% to 1,210.52.

The euro increased 0.4% to $1.1349, the strongest in more than a month.

The Japanese yen weakened 0.3% to 107.24 per dollar, the largest drop in almost two weeks.

Bonds

The yield on two-year Treasurys was unchanged at 0.15%.

The yield on 30-year Treasurys decreased two basis points to 1.32%.

Germany's 10-year yield gained five basis points to -0.42%, the highest in more than a week on the biggest advance in more than a week.

Commodities

West Texas Intermediate crude decreased 2.1% to $39.69 a barrel.

Gold strengthened 0.2% to $1,803.18 an ounce.