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Stocks Waver as Bond Yields Edge Down

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07/10/2020 | 09:49am EDT

By Avantika Chilkoti and Xie Yu

U.S. stocks opened near flat and investors moved into the safety of government bonds as jitters mounted about the recovery from Covid-19 lockdowns.

The S&P 500 rose less than 0.1% in the early minutes of New York trading. The Dow Jones Industrial Average advanced 23 points, also less than 0.1%. The Nasdaq Composite, which closed at a record Thursday, opened slightly lower.

European stocks traded slightly higher, with the Stoxx Europe 600 index up 0.7%. Asian markets were mostly lower as China's recent market rally lost steam.

Global investors appeared to grow increasingly concerned about the impact of the coronavirus spread in the U.S. on the economic outlook, and sought shelter in government bonds Friday. The yield on the 30-year Treasury fell to 1.281%, and the yield on the 10-year Treasury hit 0.595%, both having reached their lowest levels since April before recovering slightly.

"At some stage you accept the reality that Covid hasn't gone away, that it's going to have an impact on all economies in terms of social distancing until we have a vaccine," said Brian O'Reilly, head of market strategy for Mediolanum International Funds.

In China an uninterrupted streak of stock market gains ended Friday, with the Shanghai Composite Index closing nearly 2% lower. It had risen 16.5% over eight straight sessions of gains, the biggest eight-day percentage gain since March 2008, according to Dow Jones Market Data.

Perhaps seeking to avoid a repeat of the stock market bubble and bust of 2015, Chinese authorities have signaled concerns about overshooting, with a state-run financial newspaper stressing the importance of long-term investment.

Friday's fall may have been propelled by actions by state-owned investors. Filings showed that big players such as the National Council for Social Security Fund had unloaded stocks, according to Alvin Ngan, strategist at Zhongtai International Holdings, a Hong Kong-based brokerage.

"The cooling tone from the authorities could take some of the sheen off the frenetic market, " he said.

In commodities, Brent crude, the international benchmark for oil prices, fell 0.4% to $42.18 a barrel, amid concerns that the rising number of Covid-19 cases could upset any increase in energy demand.

Ahead of the opening bell in New York, shares in United Airlines dropped 3.9%. S&P Global Ratings downgraded the carrier one notch further into junk territory after the market close on Thursday, citing the virus-related drop in travel demand. Other airlines' shares moved lower too, with Delta Air Lines and Southwest Airlines falling about 2% premarket.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Xie Yu at Yu.Xie@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.12% 27349.96 Delayed Quote.-4.68%
NASDAQ 100 -0.11% 11252.194047 Delayed Quote.29.02%
NASDAQ COMP. 0.03% 11108.476172 Delayed Quote.23.80%
S&P 500 0.05% 3350.05 Delayed Quote.3.66%
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