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Stocks fall on Wall Street as coronavirus spreads in Europe

Alex Veiga
Associated Press

New York – Stocks are ending mostly lower on Wall Street, giving the S&P 500 its third straight loss this week. The benchmark index slipped 0.2% Thursday.

Rising infections in Europe and new measures to contain the coronavirus there motivated traders to pull money out of riskier investments. European markets fell broadly after France imposed a curfew on many of its biggest cities and Londoners faced new travel restrictions.

United Airlines slumped after reporting that its revenue plummeted over the summer. Crude oil prices fell and Treasury yields were mixed. Small-cap stocks bucked the downward trend and ended higher.

Pedestrians pass the New York Stock Exchange Wednesday, Oct. 14, 2020, in New York.

The market’s pullback has extended this week as optimism that Congress will deliver another round of stimulus for the economy wanes and new data show another weekly surge in the number of Americans seeking unemployment aid.

Technology, communications and health care stocks accounted for much of the selling, outweighing gains in banks, real estate and other sectors. 

Treasury yields were mixed, while the price for U.S. crude oil also headed lower.

Stocks have been mostly climbing this month, but have pulled back this week as talks between Democrats and Republicans in Washington over another economic stimulus package drag on, dimming investors’ hopes for a deal that can deliver more aid for the U.S. economy in the near term.

“The stimulus talk continues to be a little negative, and the virus outbreak in Europe that’s going to probably cause more shutdowns in various cities and countries, that’s a little bit of a negative, too,” said Scott Wren, senior global market strategist, Wells Fargo Investment Institute.

Still, Wren added, the market is expecting Washington will deliver another round of stimulus at some point, and continues to expect that various efforts to develop COVID-19 treatments and vaccines will pan out, eventually. If that wasn’t the case, the recent pullback in stocks would be much more severe, he said.

“The market is still pretty convinced we’re going to see good news on both fronts, it’s just not sure when,” Wren said.

The selling eased into the afternoon, with indexes regaining some ground. The Dow Jones Industrial Average was down 28 points, or 0.1%, to 28,490 as of 3 p.m. Eastern time. The Dow had been down 332 points in the early going. The Nasdaq composite dropped 0.7%. The Russell 2000 index of small-cap stocks bounced back from an early slide and was up 0.8%.

The government’s latest weekly tally of unemployment claims underscores how the economy continues to be hobbled by the pandemic and recession that erupted seven months ago. The Labor Department said Thursday that the number of Americans seeking unemployment benefits rose last week to 898,000, a historically high number that exceeds analysts forecasts.

The report follows recent data that have signaled a slowdown in hiring. The economy is still roughly 10.7 million jobs short of recovering all the 22 million jobs that were lost when the pandemic struck in early spring.

The 10-year Treasury yield held steady at 0.73%.

Investors continued to weigh the latest batch of earnings reports from major U.S. companies. Several reports so far have been better than expected, but the health crisis continues to cloud the outlook.

United Airlines slumped 3.5% Thursday after reporting that its revenue plummeted over the summer. Morgan Stanley was up 1.2% after the investment bank said its third-quarter profit jumped 25% thanks to a surge in trading revenue and higher fees. Walgreens Boots Alliance rose 4.9% after the drugstore chain’s latest quarterly results topped Wall Street’s forecasts.

Across the S&P 500, analysts are expecting companies to report another drop in profits for the summer from year-ago levels. But they’re forecasting the decline to moderate from the nearly 32% plunge from the spring as the economy has shown signs of improvement.

A resurgence in coronavirus infections in Europe has also given investors cause to turn cautious. Fears are rising that Europe is running out of chances to control the new outbreak, as infections hit record daily highs in Germany, the Czech Republic, Italy and Poland. France slapped a 9 p.m. curfew on many of its biggest cities and Londoners face new travel restrictions as governments take increasingly tough actions.

The limits on public life are not as strict as the full lockdowns imposed during the spring, but will stunt or even reverse the economy’s recovery from recession, experts say.

European markets fell broadly after France imposed a curfew on many of its biggest cities and Londoners faced new travel restrictions. Germany’s DAX lost 2.5%. The CAC 40 in France slid 2.1%. The FTSE 100 in London fell 1.7%.

In Asian trading Thursday, the Shanghai Composite Index lost 0.3% to 3,332.18 and the Nikkei 225 in Tokyo sank 0.7% to 12,827.82. The Hang Seng in Hong Kong lost 2.1% to 24,154.15.

The Kospi in Seoul shed 0.8% to 2,361.21 despite a strong market debut by the company that manages popular South Korean boy band BTS. The group faces criticism by Chinese internet users after its leader thanked Korean War veterans for their sacrifices.

Big Hit Entertainment Ltd.’s share price doubled by midday but ended the day close to its opening. Its market value after an initial public offering that raised more than $800 million was about $7.5 billion.

In Sydney, the S&P-ASX 200 gained 0.5% to 6,210.30 while India’s Sensex lost 1.2% to 40,293.61.

Thailand’s benchmark lost 1.5% after the government declared a “severe state of emergency” following a rally Wednesday by protesters demanding democratic change.

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AP Business Writer Joe McDonald contributed.