By Stephen Culp
U.S. stocks lost ground on Thursday as grim economic data and mixed earnings prompted investors to take profits at the close of the S&P 500's best month in 33 years, a remarkable run driven by expectations the economy will soon start recovering from crushing restrictions enacted to curb the coronavirus pandemic.
While risk-off selling pulled all three major U.S. stock averages into the red, the S&P 500 and the Dow posted their largest monthly percentage gains since January 1987, with the Nasdaq having its best month since June 2000.
The three indexes remain well within 20% of record highs reached in February, having quickly rebounded since shutdown efforts to curb the spread of the coronavirus pandemic brought the economy to a grinding halt.
The five-week tally of unemployment claims topped 30 million and consumer spending has plummeted, according to the latest round of dismal indicators providing another snapshot of the crushing economic effects of the widespread shutdown.
"We've had a tremendous run but we've had the worst economic data since the Great Depression," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "Business and earnings might not be snapping back as quickly as the v-shaped recovery on Wall Street would imply."
The Federal Reserved announced that it would broaden its "Main Street Lending Program" by lowering the minimum loan size and expanding eligibility.
"Wall Street is liking all the programs that the government and the Fed are putting together," Nolte added. "So Wall Street is doing fine but Main Street is going to be a longer process."
The Dow Jones Industrial Average fell 288.14 points, or 1.17%, to 24,345.72, the S&P 500 lost 27.08 points, or 0.92%, to 2,912.43 and the Nasdaq Composite dropped 25.16 points, or 0.28%, to 8,889.55.
Of the 11 major sectors in the S&P 500, all but consumer discretionary and communications services closed in negative territory, with materials and financials suffering the largest percentage losses.
Earnings season continues apace, with 236 of the companies in the S&P 500 having reported quarterly results. Of those, two-thirds have surprised consensus estimates to the upside, according to Refinitiv data.
But there have been 90 negative pre-announcements in the first quarter, compared with 40 positive, and analysts see aggregate S&P 500 earnings dropping by a year-on-year rate of 14.4% in the first three months of 2020, per Refinitiv.
Market leaders Apple Inc and Amazon.com reported results after the closing bell. In post-market trading, Apple shares gained more than 2% while Amazon.com was down over 5%.
Facebook Inc climbed 5.2% after the social media company reported better-than-expected quarterly revenue.
American Airlines posted its first quarterly loss since emerging from bankruptcy in 2013, sending its shares down 4.9%.
Declining issues outnumbered advancing ones on the NYSE by a 2.58-to-1 ratio; on Nasdaq, a 2.81-to-1 ratio favored decliners.
The S&P 500 posted three new 52-week highs and one new low; the Nasdaq Composite recorded 25 new highs and four new lows.
Volume on U.S. exchanges was 12.80 billion shares, compared with the 12.3 billion average over the last 20 trading days.
(Reporting by Stephen Culp; Editing by Tom Brown)