Written by STAN CHOE and ALEX VEIGA AP Business Writers
(AP) — The S&P 500 gave up an early gain and ended slightly lower, ending a three-day winning streak. The benchmark index fell 0.4% after a wobbly day of trading. Like other markets worldwide, Wall Street took a pause following some recent gains. Treasury yields held steady and oil prices ended lower. The index has climbed back within 8% of its record set in February, but analysts still say more volatility may be ahead. Even with its three days of recent gains the index still hasn’t clawed back the ground it lost in a 6% drop last Thursday.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Wall Street is drifting in another day of wobbly trading Wednesday, as markets worldwide take a pause following their big rally.
The S&P 500 was virtually flat, as of 3 p.m. Eastern time, after earlier bouncing between a gain of 0.5% and a loss of 0.5%. Stocks elsewhere in the world made mostly modest gains, and Treasury yields were holding relatively steady.
The Dow Jones Industrial Average was down 36 points, or 0.1%, at 26,243, and the Nasdaq composite was up 0.6%.
“This to me is one of the quieter days we’ve had in terms of volatility, so it’s been a little bit refreshing,” said David Chalupnik, head of active domestic portfolio managers for Nuveen.
If the S&P 500 manages a gain, it would be its fourth straight, though the advances have often been tenuous. The index has climbed back within 8% of its record set in February, after earlier being down nearly 34%, as reports give hope that the economy can pull out of its recession relatively quickly.
With businesses reopening across the country, reports on retail sales Tuesday and on the job market earlier this month were much healthier than economists expected.
Continuing, unprecedented amounts of aid from the Federal Reserve are also helping to support markets, and the central bank’s chair told Congress Wednesday that it’s willing to keep interest rates at nearly zero and maintain its emergency lending programs.
Still, many professional investors urge caution and say the market’s big rally may have been overdone. The road back to full recovery will be long and is full of potential setbacks, in sharp contrast to the quick surge of roughly 40% for the S&P 500 since late March.
Consider Norwegian Cruise Line Holdings, whose stock has often led the market — both up and down — as expectations swing about the reopening economy. It had six straight days this month where it rose or fell more than 10%.
It said late Tuesday that it’s cancelling most of its voyages through September. Its shares fell 6.8%.
The chief risk for the market lies in rising infection levels in several hotspots around the world, including Florida, Texas and China. Even if authorities don’t reinstate widespread lockdowns, the worry is that businesses and consumers could get frightened by new waves of infections and pull back on their spending.
Such worries rocked the market last week, sending the S&P 500 down nearly 6% one day, and they’ve continued to hang in the background this week.
“Any indication that there is an increase in a handful of states that have led the charge in reopening does kind of douse the flames a bit for a rally,” said Nela Richardson, investment strategist at Edward Jones. “We saw that last week and we may be seeing that again today, though definitely not the same dramatic swing we saw last week.”
Cruise lines had the sharpest losses in the S&P 500, but other companies whose profits are closely tied to the strength of the economy were also weak. Energy companies in the S&P 500 fell 2.5% for the largest loss among the 11 sectors that make up the index. Banks were also laggards, with JPMorgan Chase down 1.8% and Bank of America down 2.3%.
Stocks of smaller companies were weak, which is typical when investors are apprehensive about the economy. The Russell 2000 index of small-cap stocks fell 1.2%.
On the winning side were home builders after a report showed that construction activity rebounded following months of sharp declines due to shutdowns caused by the pandemic. Builders began construction on 4.3% more homes in May than April. D.R. Horton rose 1.3%.
The growth in housing activity, though, was not as strong as economists expected and another sign of the long road to full recovery.
“As a signal for the overall economy, what housing is telling us is despite very low rates it’s going to be a slow rebound to normal,” Richardson said.
Big technology companies made modest moves higher, including a 0.7% rise for Microsoft and a 0.4% gain for Apple. Because these are the biggest companies in the S&P 500, their movements have bigger sway on the index.
The yield on the 10-year Treasury slipped to 0.73% from 0.75% late Tuesday. It tends to move with investors’ expectations for the economy and inflation.
In Europe, Germany’s DAX returned 0.5%, and France’s CAC 40 rose 0.9%. The FTSE 100 in London added 0.2%.
In Asia, South Korea’s Kospi ticked up 0.1%, and the Hang Seng in Hong Kong rose 0.6%. Japan’s Nikkei 225 fell 0.6% after the government reported the sharpest decline in exports since the 2008 global crisis.
A barrel of U.S. crude oil for delivery in July slipped 42 cents to settle at $37.96. Brent crude, the international standard, slipped 25 cents to $40.71 per barrel.