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Stocks Wobble as Investors Seek Shelter In Bonds

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07/10/2020 | 10:41am EDT

By Avantika Chilkoti and Xie Yu

U.S. stocks wobbled between small gains and losses, while investors moved into the safety of government bonds as jitters mounted about the recovery from Covid-19 lockdowns.

The Dow Jones Industrial Average ticked up 0.2% in morning trading. The S&P 500 fell less than 0.1%, while the technology-heavy Nasdaq Composite declined 0.4%.

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. 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.

Technology stocks in the S&P 500, which have performed strongly this year, were the index's worst-performing sector Friday, falling 0.7%.

Energy and financials were the S&P 500's best performers, rising 1.4% and 1.1%, respectively. Energy stocks getting a boost from an uptick in oil prices. U.S. crude futures rose 0.5% to $39.83 a barrel.

BioNTech, a German biotech firm that has partnered with Pfizer to develop a coronavirus vaccine, rallied after its chief executive told The Wall Street Journal that early data for its vaccine was promising and it could seek regulatory approval by the end of the year. American depositary receipts of BioNTech were recently up 5%.

Overseas, European stocks were trading higher, with the Stoxx Europe 600 index up 0.5%. Asian markets were mostly lower as China's recent market rally lost steam.

In China a 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.

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

 

Stocks mentioned in the article
ChangeLast1st jan.
BIONTECH SE 2.73% 71 Delayed Quote.103.98%
DJ INDUSTRIAL -0.29% 27896.72 Delayed Quote.-1.97%
LONDON BRENT OIL -0.38% 45.06 Delayed Quote.-32.59%
NASDAQ 100 0.19% 11178.370244 Delayed Quote.27.76%
NASDAQ COMP. 0.27% 11042.504225 Delayed Quote.22.73%
PFIZER LIMITED -0.28% 4534.3 End-of-day quote.7.34%
PFIZER, INC. -0.42% 38.17 Delayed Quote.-2.17%
S&P 500 -0.20% 3373.43 Delayed Quote.3.19%
S&P/CITIC 300 INDEX -0.01% 4029.52 Delayed Quote.13.72%
S&P/CITIC 50 INDEX -0.02% 3912.74 Delayed Quote.5.08%
STOXX EUROPE 600 -0.63% 372.53 Delayed Quote.-9.85%
STOXX EUROPE 600 NR -0.55% 817.78 Delayed Quote.-8.37%
WTI -0.41% 42.325 Delayed Quote.-32.22%
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