Wall Street's Rally Ends 05/28 15:58
Wall Street's rally ran out of fuel in the last hour of trading on Thursday,
and the market fell to its first loss in four days amid worries about rising
(AP) -- Wall Street's rally ran out of fuel in the last hour of trading on
Thursday, and the market fell to its first loss in four days amid worries about
rising U.S.-China tensions.
The S&P 500 had been climbing for much of the day and was up as much as 1.1%
at one point. But it all disappeared after President Donald Trump said he'll
hold a news conference about China on Friday. That raised immediate worries
among investors about possibly worsening relations between the world's largest
economies, which had signed a deal earlier this year to at least pause their
"The concerns are that this escalates over the course of the summer," said
Quincy Krosby, chief market strategist at Prudential Financial. "It's like
lighting a match."
The S&P 500 ended the day down 6.40, or 0.2%, at 3,029.73. The Dow Jones
Industrial Average swung from a gain of 210 points to a loss of 147.63 by the
close of trading, down 0.6% to 25,400.64. The Nasdaq composite fell 43.37, or
0.5%, to 9,368.99.
U.S. and Chinese officials have been trading harsh rhetoric recently on
everything from Hong Kong to the response to the coronavirus outbreak.
Investors are worried that it could lead to another punishing round of
escalating tariffs between the two countries, which would only further damage a
global economy punished by a severe recession due to the pandemic.
Energy producers and banks fell to some of Thursday's sharpest losses.
Twitter also lost 4.4%. Trump signed an executive order late Thursday to
study whether new regulations can be put on social media companies. He has been
railing against Twitter after it applied fact checks to two of his tweets.
Earlier in the day, the S&P 500 seemed to be rolling toward its fourth
straight gain, which would have been its longest winning streak since before
the market began to sell off in February.
Gains for health care stocks helped the S&P 500 at one point climb back
within 10% of its record high. Johnson & Johnson rose 1.4%, Pfizer gained 2.1%
and Eli Lilly added 3.4%.
Dollar Tree jumped 11.6% for the largest gain in the S&P 500 after the
retailer reported stronger revenue and earnings for its latest quarter than
Wall Street expected. In an encouraging sign, executives also said recent
trends have been improving for purchases of discretionary items, such as
kitchenware and toys, instead of just essentials for hunkering down.
Even with Thursday's loss, the S&P 500 is still on pace for its third weekly
gain of at least 2.5% in the last four weeks. Following their breathtaking drop
of nearly 34% in February and much of March, stocks began recovering after the
Federal Reserve and Capitol Hill pledged unprecedented amounts of aid for the
More recently, the market has pushed higher as investors move into stocks
that would benefit most from a reopening economy. Governments around the
country and around the world are slowly lifting restrictions meant to corral
the outbreak, which has investors hoping the worst of the recession has already
passed, or will soon.
Some analysts warn the rally has been overdone. The stock market has
rebounded very quickly after hitting a bottom in late March, when the economy
may take much longer to heal and recover. That could be setting investors up
for disappointment in the future.
"I don't know why investors are so confident," said Mike Zigmont, head of
trading and research at Harvest Volatility Management. "The damage has been so
great that some businesses that otherwise would have survived, they will fail."
Hotels, airlines and related industries are not going to get back to their
2019 levels anytime soon, he said. When tourists do return, it will not be in
the same numbers.
"It's unreasonable to expect us to regain jobs as fast as we lost them," he
Longer-term Treasury yields rose Thursday after a government report showed
that the number of workers filing for unemployment benefits dipped for the
eighth straight week, though the number remains incredibly high.
Perhaps more importantly for the market, the number of continuing claims for
unemployment fell to 21.1 million from 24.9 million. It's the first decline
since the number of layoffs exploded in March. If it continues, economists said
it could be a sign that more people are going back to work as states begin
The yield on the 10-year Treasury rose to 0.70% from 0.67% late Wednesday.
It tends to move with optimism about the economy's strength and inflation.
European stock markets mostly rose, while Asian markets were mixed.
A barrel of U.S. crude oil for delivery in July rose 90 cents to settle at
$33.71. Brent crude, the international standard, rose 55 cents to $35.29 per