Stocks Drop on Energy Selloff Amid Virus Jitters: Markets Wrap

(Bloomberg) -- U.S. stocks fell amid a selloff in giant oil producers and concern that a resurgence of coronavirus cases would curb an economic recovery. The dollar rose.

Energy shares led declines in the S&P 500 as Exxon Mobil Corp. and Chevron Corp. had their worst quarterly losses in a generation. Equities also dropped after Florida posted a fourth straight record in deaths by Covid-19, Arizona’s cases accelerated and New Jersey’s virus transmission rate jumped. House Speaker Nancy Pelosi said Republicans don’t have the votes to extend the $600 per week unemployment benefit that’s propped up incomes and spending. The Nasdaq 100 outperformed after solid results from Apple Inc., Amazon.com Inc., Facebook Inc. and Alphabet Inc.

Despite the losses in the broader equity market, the S&P 500 was still poised to notch its fourth consecutive monthly advance. Though signs the economic rebound is stalling might make it tougher for stocks to gain further momentum. U.S. consumer sentiment extended its slide in late July as the resurgent coronavirus led to renewed business closings and layoffs. The extra $600 per week unemployment benefit was set to expire on Friday, and Congress has yet to agree on a new stimulus package.

“With the impact of past stimulus measures fading and given some evidence that the global recovery has already stalled, it remains to be seen what will help keep global stock markets elevated in the coming months, especially U.S. stocks,” said Fawad Razaqzada, a market analyst at ThinkMarkets. “There is a risk we may see a correction in August, although it doesn’t have to be as severe as the one we saw in March, for things have since improved and monetary conditions are even more accommodative.”

Tech companies continued to lead the advance in 2020, and their results are a validation for bulls who have bet the industry would emerge from the pandemic stronger than the rest of the market. Since the bottom in March, the Nasdaq 100 has added about $4 trillion in market value. It’s poised to beat the benchmark gauge for a 10th straight month -- the longest winning streak in 20 years.

Despite the tech resilience, Michael Sheldon, chief investment officer at RDM Financial Group, said it’s very possible the market could enter a trading range over the next month or two because there’s still a lot of uncertainty.

“If you look ahead 12 to 18 months, the economy is likely to continue to recover from the deep downturn caused by Covid-19,” he said. “However, it’s important for investors to know that the recovery in the economy is not likely to be in a straight line. There will likely be bumps around the way.”

Some other corporate highlights:

These are some of the main moves in markets:

Stocks

• The S&P 500 fell 0.2% as of 2:45 p.m. New York time.
• The Stoxx Europe 600 Index decreased 0.9%.
• The MSCI Asia Pacific Index dipped 1.5%.

Currencies

• The Bloomberg Dollar Spot Index increased 0.3%.
• The euro decreased 0.3% to $1.1811.
• The Japanese yen depreciated 1.1% to 105.86 per dollar.

Bonds

• The yield on 10-year Treasuries fell less than one basis point to 0.54%.
• Germany’s 10-year yield rose two basis points to -0.52%.
• Britain’s 10-year yield rose two basis points to 0.104%.

Commodities

• The Bloomberg Commodity Index increased 0.4%.
• West Texas Intermediate crude fell 0.2% to $39.83 a barrel.
• Gold strengthened 0.7% to $1,970.03 an ounce.

©2020 Bloomberg L.P.