Wall Street drops as economic woes hit banks and industrials stocks
Wall Street’s main stocks indexes fell on Wednesday as concerns around slowing economic growth and fresh COVID-19 fears hit economically-sensitive sectors, including banks and industrials.
Nine of the 11 S&P indexes were down in early trading, with financials and industrials falling 0.6% each. Energy stocks, another economy-linked sector, sank 2.2% on the back of lower oil prices.
Banking stocks slid 0.8%, tracking weakness in bond yields, as data showed U.S. private payrolls increased far less than expected in July, likely constrained by shortages of workers and raw materials.
Heavyweight technology stocks, including Netflix Inc, Amazon.com Inc, and Facebook Inc, deemed “stay-at-home-winners” during last year’s COVID-19 lockdowns, were among the smallest decliners.
“The drop in bond yields is like a canary in the coal mine and is for now helping growth stocks, while large cyclical stocks are showing signs of weakness may be because investors are questioning the passage of the huge infrastructure package,” said Sam Stovall, chief investment strategist at CFRA Research.
A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. REUTERS/Carlo Allegri/File Photo
Investor sentiment received a boost on Monday after the Senate introduced a $1 trillion infrastructure bill, but the Democratic and Republican leaders have squabbled over the debate on amendments.
Focus now turns to the services sector activity data later in the day, and the Labor Department’s monthly jobs report on Friday.
At 9:35 a.m. ET, the Dow Jones Industrial Average was down 146.24 points, or 0.42%, at 34,970.16.
The S&P 500 was down 11.93 points, or 0.27%, at 4,411.22, after closing at a record high in the previous session, while the Nasdaq Composite was down 10.20 points, or 0.07%, at 14,751.10.
BorgWarner Inc slid 1.1% in earnings-related moves even as it beat profit expectations on strong consumer demand for new vehicles. In comparison, Kraft Heinz Co tumbled 3.1% despite beating expectations for quarterly net sales.
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General Motors Co slumped 6.4% even as it swung to a profit in the second quarter and lifted its full-year forecast.
Although second-quarter earnings from S&P 500 firms have so far been much better than expected, their shares have retreated as investors booked profits on lofty valuations.
Robinhood Markets Inc jumped 40.2%, as interest from star fund manager Cathie Wood and small-time traders set up the stock for the fourth session of gains after its underwhelming IPO last week.
Declining issues outnumbered advancers for a 2.08-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.79-to-1 ratio on the Nasdaq.
The S&P index recorded 27 new 52-week highs and no new lows, while the Nasdaq recorded 36 new highs and 30 new lows.
(Reporting by Sagarika Jaisinghani and Shashank Nayar in Bengaluru; Editing by Arun Koyyur)
