A late-day slide left the stock market broadly lower at the end of a choppy day of trading. The S&P 500 index lost 1% today, giving back some of the ground it had gained in a big rally a day earlier.
Losses for banks, health care stocks and elsewhere outweighed solid showings for technology companies and those that rely on consumer spending.
Kohl’s, whose stores are closed, fell after repporting a $541 million loss as its revenue fell more than 40%. Bond yields fell in a sign that investors’ optimism about the economy was waning again. Oil prices rose.
“Today is a little bit of a pause day after a significant rally,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.
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.
Optimism about a potential vaccine for COVID-19 and hopes for a U.S. economic recovery in the second half of the year pushed stocks sharply higher Monday, reversing all of the market’s losses so far this month. The S&P 500 is still down about 13% from its all-time high in February.
A safe, effective vaccine for the new coronavirus would help reinforce confidence as economies reopen after shutdowns to contain the pandemic. Experts have warned, however, that development of such a vaccine will likely take many months, and possibly years.
Quarterly results from two big retailers Tuesday underscored how companies that have been able to remain open or effectively amplify their e-commerce business have been able to fare far better than those that have had to temporarily close doors.
Walmart reported a 74% surge in fiscal first-quarter sales as people stocked up on crucial supplies while sheltering in place due to the coronavirus. Its earnings fell as it spent $900 million in additional compensation for workers, but still topped Wall Street’s forecasts. Its shares were down 1.9% after shedding early gains.
Meanwhile, Kohl’s, whose stores have been closed during the outbreak, fell 7% after reporting that it swung to a $541 million quarterly loss as its revenue sank more than 40%.
Traders also hammered shares in Home Depot after the home improvement supply chain reported quarterly results that fell short of Wall Street’s estimates. While the company benefited from a surge in homeowners rushing to buy essential supplies, increased spending on employee compensation and other costs related to the coronavirus dragged on its profits. The stock fell 2.4%.
“Investors have been looking for companies and sectors that could do well in the current environment,” said Sal Bruno, chief investment officer of IndexIQ. “Looking forward, where does that continued leadership come from?”
The Commerce Department said residential construction ground breakings fell in April to their lowest level in five years. But building permits, a gauge of potential future construction activity, fell less than analysts had expected. That helped push homebulder stocks broadly higher. Beazer Homes USA led the pack, surging 8.3%.
Oil prices were mixed, though they remained above $30 a barrel. Benchmark U.S. crude oil for June delivery rose 68 cents, or 2.1%, to settle at $32.50 a barrel. July delivery of Brent crude oil, the international standard, fell 16 cents, or 0.5%, to $34.65 a barrel.
Prices have firmed up as oil producing nations cut back on output and as the gradual reopening of the economies around the globe helps spur demand, which crashed earlier this year due to widespread travel and business shutdowns related to the coronavirus. Crude oil started the year at about $60 a barrel.
Bonds yields were mostly lower. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, fell to 0.70% from 0.74% late Monday.
France’s CAC 40 lost 0.9%, while Germany’s DAX inched up 0.1%. Britain’s FTSE 100 dropped 0.8%. Markets in Asia finished higher.