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Wall Street Wilts on Economy Worries   07/09 15:48

   Most of Wall Street wilted Thursday on worries that the economy's recent 
improvements may be set to fade as coronavirus cases keep climbing.

   NEW YORK (AP) -- Most of Wall Street wilted Thursday on worries that the 
economy's recent improvements may be set to fade as coronavirus cases keep 
climbing.

   The S&P 500 lost 0.6%, with three in four stocks within the index falling. 
The sharpest drops hit oil companies, airlines and other stocks whose fortunes 
are most closely tied to a reopening and strengthening economy. Treasury yields 
also sank in another sign of increased caution.

   The Dow Jones Industrial Average dropped 361.19 points, or 1.4%, to 
25,706.09, while the 17.89 point fall for the S&P 500 to 3,152.05 was just its 
second loss in the last eight days.

   Smaller stocks sank more than the rest of the market, which often happens 
when investors are downgrading their expectations for the economy. The Russell 
2000 index of small-cap stocks lost 28.48, or 2%, to 1,398.92.

   The Nasdaq composite was an outlier as investors continue to bet big 
tech-oriented stocks can keep growing almost regardless of the economy's 
strength. It added 55.25, or 0.5%, to 10,547.75 and hit another record.

   "The broad equity market is navigating through a zone of uncertainty," said 
Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

   "There are ample reasons for caution," he said. "Clearly there's uncertainty 
surrounding the impact and duration of this virus."

   Thursday's headline economic report showed that a little more than 1.3 
million workers filed for unemployment claims last week. It's an astoundingly 
high number, but it's also down from 1.4 million the prior week and from a peak 
of nearly 6.9 million in late March.

   The improvements help validate investors' earlier optimism that the economy 
can recover as states and other governments relax restrictions put in place 
earlier this year to slow the coronavirus pandemic. Such optimism helped the 
S&P 500 rally back to within 7% of its record, after earlier being down nearly 
34%.

   But economists point to a troubling slowdown in the pace of improvements, 
including moderating declines in the four-week average of jobless claims. 
Further gains for the job market are going to be more difficult, said Patrick 
Schaffer, global investment specialist at J.P. Morgan Private Bank. The U.S. 
unemployment rate is currently 11.1%.

   "The initial jump was the easy part," he said. "The reality is the labor 
market continues to face enormous headwinds."

   Investors are worried that worsening infection levels across swaths of the 
U.S. South and West and in other global hotspots could derail the budding 
recovery. Some states are rolling back their reopenings, while others are 
ordering people arriving from hotspots to quarantine.

   "When the restrictions were relaxed in the beginning part of June, you saw 
parts of the tangible economy do really well," Schaffer said. "A lot of that 
has been unwound as we've seen a resurgence in case count and some restrictions 
being put in place."

   Markets have been quick to react to infection and hospitalization rates in 
Florida and other big Sun Belt states in particular. Thursday's losses for 
stocks accelerated after Florida reported the largest daily increase in deaths 
yet from the pandemic, with its cumulative death toll topping 4,000.

   Such concerns helped push Treasury yields lower. The yield on the 10-year 
note, which tends to move with investors' expectations for the economy and 
inflation, sank to 0.60% from 0.65% late Wednesday.

   The price of gold also held above $1,800 per ounce. Gold tends to rise when 
investors are worried about the economy, and on Wednesday it touched its 
highest price since September 2011. After flipping between small gains and 
losses, gold for delivery in August dipped $16.80 to settle at $1,803.80.

   In the stock market, the sharpest losses hit companies whose profits tend to 
rise and fall most closely with the strength of the economy. Energy stocks 
dropped 4.9% for the biggest loss among the 11 sectors that make up the index. 
Exxon Mobil sank 4.1%, and ConocoPhillips fell 6.6%. Benchmark U.S. crude 
dropped $1.28 to settle at $39.62 per barrel.

   Financial stocks were also particularly weak, with JPMorgan Chase down 2.2% 
and Citigroup down 2.8%, as a struggling economy raises the threat of borrowers 
failing to repay their loans.

   Airlines and other companies that desperately need the pandemic to ease so 
customers can return also slumped. United Airlines lost 7.3%, retailer Kohl's 
sank 7.2% and mall-owner Simon Property Group fell 5.3%.

   Walgreens Boots Alliance dropped 7.8% for one of the biggest losses in the 
S&P 500 after it said it lost $1.7 billion in the latest quarter as the 
pandemic kept many of its customers around the world at home.

   Companies across the country are preparing to report their second-quarter 
results in upcoming weeks, and forecasts are uniformly dismal.

   Stocks in overseas markets were mixed, though China continued its huge run. 
Stocks in Shanghai added another 1.4%, bringing its gain for July to 15.6% and 
further stoking worries that speculators are in charge of the market.

 
 
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