By Caitlin McCabe, Avantika Chilkoti and Frances Yoon
The S&P 500 and Dow Jones Industrial Average edged lower in a choppy trading session Wednesday, as investors continued to try to untangle data and corporate earnings to determine what the economy might look like in the months ahead.
After opening modestly higher, the indexes flitted between small gains and losses throughout most of the day. The declines accelerated in the final hour of the session.
The S&P 500 lost 20.02 points, or 0.7%, to 2848.42. The Dow dropped 218.45 points, or 0.9% to 23664.64.
Only the Nasdaq Composite was solidly higher for the day, driven upward by a continued rally in technology stocks. The index rose 45.27 points, or 0.5%, to 8854.39.
Wednesday’s volatility came as investors struggled to parse widely varying data and events related to the coronavirus pandemic. In recent days, stocks have been buoyed by optimism around the continued lifting of stay-at-home orders. Several states have already begun to reopen their economies and others are formulating plans.
President Trump, in particular, has been eager to energize the economy, saying Wednesday that the White House coronavirus task force would focus on reopening the country and developing a vaccine.
Still, much about the country’s future remains unknown. The number of confirmed coronavirus cases in the U.S. has climbed beyond 1.2 million, and many have fear there could be a resurgence of cases as life begins to return to normal. Comments from corporate executives, meanwhile, haven’t offered investors reassurance either, as companies have continued to report massive profit declines, dividend cuts and layoffs during first-quarter earnings season.
Economic data look similarly grim. The nonfarm private sector in the U.S. lost about 20.2 million jobs from March to mid-April, the ADP National Employment Report revealed Wednesday. Losses were the steepest among large businesses with 500 or more employees, raising new questions about whether more pain in the markets could be ahead.
“We’re seeing data that’s just off the charts,” said Philip Lawlor, managing director of global markets research at FTSE Russell. “Has the market fully discounted [all of this]? My suspicion is that we haven’t yet reached that point.”
Since the U.S. stock market bottomed March 23, equities have largely charged upward, puzzling many economists about what an eventual economic recovery might look like. Both the S&P 500 and Nasdaq are up week-to-date, and the Nasdaq is down just 1.3% for the year.
The Dow, in contrast, remains down 17% in 2020.
The technology sector has helped mitigate losses this year and continued to do so on Wednesday. Match Group jumped 9.1% after the online-dating company said in a letter to shareholders that it had seen a “noticeable increase” in activity among users across its brands and geographies.
And Netflix, added 2.3%, continuing its rapid climb upward for the year.
Meanwhile, Shares of General Motors jumped 3% after it became the only Detroit car company to post a profit for the first quarter.
Still, losses were broad, with nine of the S&P 500’s 11 sectors reporting declines. Among individual companies that reported earnings, Occidental Petroleum fell 13% after reporting a first-quarter loss. The Wall Street Journal also reported that the energy producer is exploring ways to reduce its roughly $40 billion debt load following a historic plunge in oil prices and a recently completed acquisition of Anadarko Petroleum.
CVS Health lost 1.3%, despite easily topping earnings expectations. Prudential Financial also fell, dropping 7.9%, after reporting ultralow interest rates pressured its profit on some insurance products.
And Walt Disney, ended the day down 0.2%. The world’s largest entertainment company said the coronavirus pandemic took a $1.4 billion bite out of its earnings.
Such wide disparities across corporate earnings this spring — coupled with dozens of companies withdrawing their guidance — have made it difficult for investors to gauge the health of the economy.
“It is hard to say just how fast the economy will bounce back,” said Patrick Spencer, managing director at U.S. investment firm Baird. “There are so many unknowns over the length of Covid and how consumers will behave once the economy begins to reopen.”
States such as Georgia, which recently lifted stay-at-home restrictions, could offer a helpful glimpse of how businesses and consumers respond. Many economists will be watching to see how long it takes companies across the U.S. to hire back the more than 30 million people who have sought unemployment benefits. Consumer spending, which accounts for more than two-thirds of economic activity, will also be closely monitored.
“I think the real question is, as the lockdowns ease, the doors to the restaurants may be opening, but how many customers are going to come in?” said Andy Sparks, MSCI’s head of portfolio management research. “There is this large amount of uncertainty hanging over the markets’ head.”
In bond markets, the yield on the 10-year U.S. Treasury rose to 0.709%, from 0.656% Tuesday. Yields rise as bond prices fall.
And in commodities, Brent crude, the global benchmark, dropped 4% to $29.72 a barrel, stalling its recent gains.
In Europe, the Stoxx Europe 600 benchmark closed down 0.3%. China’s Shanghai Composite Index closed up 0.6%. Hong Kong’s Hang Seng Index rallied 1.1%.
Write to Caitlin McCabe at firstname.lastname@example.org, Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Frances Yoon at email@example.com