U.S. Stocks Fall on Covid-19 Concerns

By Anna Hirtenstein and Michael Wursthorn

U.S. stocks slid Thursday amid a pickup in Covid-19 hospitalizations and renewed talks of lockdowns and restrictions to curb the virus's spread.

Investors sold economically-sensitive stocks, from industrials to banks to consumer staples and turned to one of the most reliable trades during the pandemic, buying shares of technology and internet companies.

The rotation helped pare losses for the Dow Jones Industrial Average and the S&P 500, but not enough to pull either index out of the red. The broad S&P 500 was down 0.3% in recent trading, while the blue-chip Dow shed about 135 points. The Nasdaq Composite, meanwhile, traded higher, gaining 0.1%.

The euphoria that had swept most stocks higher earlier this week after Pfizer and its German partner BioNTech said their Covid-19 vaccine was highly effective in combating the virus appeared to be fading as investors confronted reality.

The U.S. on Wednesday recorded its highest number of hospitalizations since the start of the pandemic and new cases have topped 100,000 for nine straight days. Although most health experts and even Wall Street agree a vaccine is likely the fastest path toward overcoming the pandemic, they have questioned when the vaccine may become available for widespread use.

Left with few options, lawmakers are again considering lockdowns and other restrictions to keep the virus in check, stirring some consternation among investors who worry that the curbs will hobble the economy. New York Gov. Andrew Cuomo on Wednesday said most bars, restaurants and gyms would have to close at 10 p.m. and cautioned that rising infection levels may prompt more restrictions.

Jefferies analysts say broad lockdowns like the ones governors across the country instituted in March and April are unlikely, but local governments will likely opt for the targeted approach similar to what was suggested by Gov. Cuomo. That would lead to further layoffs, Jefferies analysts said.

Fresh data showed that U.S. jobless claims remained high last week, but slipped to their lowest level since March, suggesting some workers are finding jobs even as virus cases climb, for now.

"The numbers are going in the right direction, but still remain extremely high in historical comparison," said Gero Jung, chief economist at Mirabaud Asset Management. "With the partial lockdown measures and more spreading of the coronavirus, it's unlikely that this will change in the short term."

Consumer prices were flat in October, according to new data out Thursday, as higher costs for dining out and groceries were offset by declines for items such as apparel and household furnishings.

"Overall, the big picture is that the disinflationary effects of the pandemic are [outweighing] the inflationary effects," said Mr. Jung. "We can expect inflation to remain very low."

In bond markets, the yield on the benchmark 10-year Treasury note fell to 0.917%, from 0.970% on Tuesday. Prices rise as yields fall. The U.S. bond market was closed Wednesday for Veterans Day.

Pharma company Moderna rose over 5% after it reported that it has sufficient data from its late-stage trial for analysis of its Covid-19 vaccine.

Some big technology stocks saw modest gains, including Apple, Facebook and Amazon.com. But the stock market was pulled lower by losses across the industrial, energy and banking sectors.

On the business front, Walt Disney and Cisco Systems are expected to report earnings after the close of markets. Their results will be closely scrutinized for insight into the strength of companies that benefit as people stay at home during the pandemic.

Overseas, the pan-continental Stoxx Europe 600 retreated nearly 1%.

Most major Asian equity benchmarks retreated modestly by the end of the day. The Shanghai Composite Index edged down 0.1% and Hong Kong's Hang Seng declined 0.3%.

Write to Anna Hirtenstein at [e-mail] and Michael Wursthorn at [e-mail]

(END) Dow Jones Newswires

11-12-20 1203ET