Wall Street dropped sharply on Thursday as investors fled market-leading tech shares due to mixed earnings reports and growing signs of a worsening coronavirus pandemic, which could exacerbate a deep economic recession.
The sell-off steepened after a tech watchdog group reported that Apple Inc faces consumer protection investigations in multiple states.
The TSX also closed lower, in a broad selloff that included both energy and materials shares, even as the price of gold rose. Nevertheless, there were many stocks with strong gains for the day amid earnings season, including a 17% jump for AutoCanada, 7.82% for Mullen Group, 6.90% for Teck Resources, and 5.88% for Empire Company.
The bellwether S&P 500 slid more than 1%, snapping a four-day winning streak with its biggest daily percentage drop since June 26. All three major U.S. stock averages lost ground, with falling momentum stocks Apple, Microsoft Corp and Amazon.com weighing heaviest.
Apple ended the session down 4.6%.
“There has been a real disparity between growth and value and the narrowing has begun,” said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco. “There was also a significant delta between large cap and small cap and we’re seeing that narrow as well.”
The Russell 2000 and the S&P Smallcap 600, both small cap indexes, outperformed the broader market.
U.S. jobless claims unexpectedly ticked higher to 1.416 million last week, the Labor Department said.
The number excludes recipients of Pandemic Unemployment Assistance, set to expire on July 31.
Congress kept working to pass new stimulus before that deadline continued, with Senate Republicans announcing they could present their version of the bill to Democrats as early as this week.
Total U.S. coronavirus cases topped 4 million on Thursday, with nearly 2,600 new cases every hour, on average, according to a Reuters tally.
The Dow Jones Industrial Average fell 353.51 points, or 1.31%, to 26,652.33, the S&P 500 lost 40.36 points, or 1.23%, to 3,235.66 and the Nasdaq Composite dropped 244.71 points, or 2.29%, to 10,461.42.
Of the 11 major sectors in the S&P 500, eight closed in the red, with tech shares notching the largest percentage drop.
The S&P/TSX Composite Index closed down 152.41 points, or 0.94%, at 16,018.65. The energy sector lost 2.26%, as oil prices tumbled 2% amid worries the U.S. Congress may not agree on a stimulus package and as jobless numbers rose. Meanwhile, analysts prepared to cut energy demand forecasts as the number of coronavirus cases surges higher.
Brent futures fell 98 cents, or 2.2%, to settle at US$43.31 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 83 cents, or 2.0%, to settle at $41.07.
The August gold contract advanced $24.90 to US$1,890.00 an ounce and the September copper contract rose 1.4 cents to roughly US$2.94 a pound.
Second-quarter reporting season is in full-stride, with 113 S&P 500 constituents having reported. Refinitiv data shows that 77% of those have beaten expectations that were extraordinarily low.
Microsoft Corp dropped 4.3% after reporting its cloud computing business Azure reported its first-ever quarterly growth under 50%.
Tesla Inc reported a profit for the fourth straight quarter, setting the company up for inclusion in the S&P 500. But the stock slid 5.0% as analysts questioned whether the electric automaker’s stock price matched its performance.
American Airlines Group Inc jumped 3.7% after announcing it would rethink the number of flights to add in August and September. Also, it reported an adjusted loss per share of $7.82.
Airlines, battered by mandated lockdowns, reversed early losses to cross well into the black. The S&P 1500 Airlines index gained 1.3%.
Twitter Inc rose 4.1% after reporting its highest-ever annual growth of daily users.
Declining issues outnumbered advancing ones on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.
The S&P 500 posted 51 new 52-week highs and no new lows; the Nasdaq Composite recorded 103 new highs and 17 new lows.
Intel Corp said after the bell that its new 7nm chip technology was six months behind schedule, which sent its shares down more than 8% in extended trading.
Reuters, Globe staff
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