By Caitlin McCabe, Avantika Chilkoti and Frances Yoon
U.S. stocks swung between small gains and losses Wednesday as investors continue to try to untangle data and corporate earnings to determine what the economy might look like in the months ahead.
The S&P 500 gained less than 0.1% in afternoon trading in a choppy session. The Dow Jones Industrial Average was down about 50 points, or 0.2%. Both indexes opened modestly higher, before giving up most of their gains.
Only the Nasdaq Composite was solidly higher for the day, up 1.2%, driven higher by a continued rally in technology stocks.
Despite Wednesday’s volatility, U.S. stocks have risen in recent days as investors look toward the continued lifting of stay-at-home orders. Several states have already begun to reopen their economies and others are formulating plans to do the same. 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, however, 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. Executive commentary, meanwhile, hasn’t offered investors reassurance either, as companies have continued to report massive profit declines, dividend cuts and layoffs during first-quarter earnings.
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. equities market bottomed on March 23, stocks have continued to charge upward, puzzling many economists about what an eventual economic recovery might look like. All three major U.S. indexes are up week-to-date, and the Nasdaq Composite is down just 0.7% 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 8.2% after the online-dating company said in a letter to shareholders Tuesday that it had seen a “noticeable increase” in activity among users across its brands and geographies.
Netflix, meanwhile, added 2.9%, continuing its rapid climb upward for the year.
Still, even as eight of the the S&P 500’s 11 sectors slid for the day, there were breakouts within industries. Shares of General Motors jumped 4.6% after it became the only Detroit car company to post a profit for the first quarter.
And CVS Health climbed 0.1% after its earnings easily topped analyst expectations. Walt Disney, meanwhile, ticked up 0.2% in the afternoon after trading lower for most of the morning. The world’s largest entertainment company said late Tuesday that the coronavirus pandemic took a $1.4 billion bite out of its earnings.
But there were also losses after disappointing earnings, too. Occidental Petroleum fell 11% after it reported a first-quarter loss. The Wall Street Journal reported Tuesday 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.
And Prudential Financial fell 7% after reporting ultralow interest rates pressured its profit on some insurance products.
Such wide disparities across corporate earnings this spring — coupled with dozens of companies withdrawing their guidance — has made it difficult for investors to determine what the economy might look like for the rest of the year.
“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.
“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 0.723%, from 0.656% on Tuesday. Yields rise as bond prices fall.
And in commodities, Brent crude, the global benchmark, dropped 4% to $29.72 a barrel, extending its recent volatile stretch.
In Europe, the Stoxx Europe 600 benchmark closed down 0.3%. China’s Shanghai Composite Index closed up 0.6% after a five-day holiday and 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