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Wall Street steadies itself, halting 4-day losing streak

Stan Choe, Damian J. Troise and Alex Veiga
Associated Press

New York – Stocks on Wall Street shrugged off an early slide and closed higher Tuesday, halting the first four-day losing streak since the market was selling off in the early days of the pandemic.

The S&P 500 climbed 1.1%, led by solid gains in technology and communications stocks, and companies that rely on consumer spending. Banks, health care and energy stocks closed lower. Homebuilders surged following a report showing U.S. home sales jumped in August to their highest level since 2006.

The gains helped the market recover some of its losses a day after stocks tumbled amid a raft of worries about the pandemic and governments’ response to it.

The facade of the New York Stock Exchange.

The S&P 500 rose 34.51 points to 3,315.57. The Dow Jones Industrial Average gained 140.48 points, or 0.5%, to 27,288.18. The Nasdaq composite climbed 184.84 points, or 1.7%, to 10,963.64. The Russell 2000 index of small company stocks picked up 11.71 points, or 0.8%, to 1,496.96.

Tuesday’s market rebound has been the exception this month. Wall Street has suddenly lost momentum in September following months of powerful gains that returned the S&P 500 to a record. The benchmark S&P 500 index is down 5.3% so far this month, while the Nasdaq is off nearly 7%. A long list of concerns for investors has caused big swings in the market, from worries that stocks have grown too expensive to frustration about Congress’ refusal so far to deliver more aid to the struggling economy.

“Right now it’s kind of reality is setting in, looking at valuations and realizing that coronavirus is still prevalent, we don’t have a vaccine and we don’t know who’s going to be in the White House in 2021,” said Lindsey Bell, chief investment strategist at Ally Invest.

Federal Reserve Chair Jerome Powell pressed Congress to act on additional aid for the economy during a House of Representatives committee hearing Tuesday, saying that the economy appears to be improving, but still likely needs more government stimulus. Extra weekly unemployment benefits and other stimulus that Congress approved in March have expired, and some areas of the economy have already slowed as a result.

That support from Congress, along with unprecedented moves by the Federal Reserve to aid markets, helped halt the S&P 500’s nearly 34% plummet earlier this year. Investors say it’s crucial that Congress extended more support, but partisan disagreements have blocked the efforts.

The sudden vacancy on the Supreme Court following the death of Justice Ruth Bader Ginsburg is amping up partisanship across the country, diminishing hopes even further.

Among other concerns for investors are rising tensions between the United States and China, which could lead to a Chinese retaliation against U.S tech companies, as well as the upcoming U.S. elections and all the changes in tax policy and regulations they can create.

All those factors combined to knock the S&P 500 down as much as 2.7% on Monday.

The uneasy trading continued early Tuesday as stock indexes swung from small gains to losses through the morning before steadying by afternoon. Tech stocks in the S&P 500 bounced between a gain of 1.7% and a loss of 0.4%, for example.

Big Tech stocks have lost momentum this month on worries their stocks grew too expensive following a supersonic run through the pandemic. Apple, Amazon and others have benefited from the pandemic because it’s accelerated work-from-home and other trends that boost their profits.

Tech stocks added to their gains Tuesday after a late-afternoon turnaround a day earlier. Apple gained 1.6% while Microsoft rose 2.4%. Amazon climbed 5.7%.

Traders also bid up shares in homebuilders after the National Association of Realtors said that sales of previously occupied U.S. homes rose 2.4% in August to their highest level since 2006. Sales are up 10.5% from a year ago and back to pre-COVID-19 levels of early 2020.

Among the biggest gainers was builder D.R. Horton, which rose 4.7%.

Stocks of companies whose profits are most closely tied to the strength of the economy clawed back some of their sharp losses from the day before, but their movements were also erratic.

Norwegian Cruise Line climbed 2.3%. Energy stocks in the S&P 500 rose as much as 1.6% in the first 20 minutes of trading, only to give all the gains away.

European stocks recovered some of their steep losses from Monday, which were triggered in part by worries that stricter restrictions on businesses may be on the way to stem a resurgence of coronavirus cases.

U.K. Prime Minister Boris Johnson on Tuesday announced a package of new restrictions, including requiring pubs and restaurants to close between 10 p.m. and 5 a.m, but analysts said they were less extreme than some investors worried.

Germany’s DAX returned 0.4%, though it’s still down 4% for the week so far. France’s CAC 40 fell 0.4%, and the FTSE 100 in London fell 0.4%.

In Asia, South Korea’s Kospi fell 2.4%, Hong Kong’s Hang Seng lost 1% and stocks in Shanghai sank 1.3%.

Treasury yields dipped, and the 10-year yield fell to 0.67% from 0.68% late Monday.

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AP Business Writer Elaine Kurtenbach contributed.