S&P 500 subdued on risks linked to reopening of economy
(Reuters) – The S&P 500 struggled for direction on Tuesday as the risks of reopening the economy too soon overshadowed hopes of a jump-start to a battered global economy, following an easing of virus-led business shutdowns.
Among the 11 major sectors, financial stocks, which generally lag when the economic outlook dims, weighed the most on the S&P 500.
Also dragging the sector lower was a 5.5% fall in BlackRock Inc, after its top shareholder PNC Financial Services Group Inc planned to sell its entire 22% stake in the world’s largest asset manager.
Optimism about an economic recovery and massive stimulus measures have helped the benchmark index climb about 34% from the lows of a pandemic-driven selloff in March.
“There’s an assumption that the worst is behind us, (but) it feels a bit premature to be frank,” said Keith Buchanan, a portfolio manager at GLOBALT in Atlanta.
“We do see accelerating infection in some places, but how that story is written into the far is yet to be seen.”
Wuhan reported its first cluster of coronavirus infections since a lockdown on the city, stoking concerns of a wider resurgence.
Also on Tuesday, leading U.S. infectious disease expert Anthony Fauci warned that while the federal government is working to help manufacture a vaccine against the new coronavirus, its development “might take some time” to come to market.
According to a report before the hearing, Fauci warned that moving too quickly to ease restrictions on business and social life will put lives at risk from the pandemic and hamper the economic recovery.
“The stock market has rebounded dramatically over the past few weeks, but there is still plenty of uncertainty surrounding the reopening of the U.S. economy,” said Dan Russo, chief market strategist of Chaikin Analytics.
“The stock market is on a short-term uptrend, within the context of a longer trend that is flat at best.”
Wall Street’s fear gauge slipped for the fourth day running, hitting a ten-week low, even as data showed U.S. consumer prices in April dropped by the most since the Great Recession.
At 11:24 a.m. ET, the Dow Jones Industrial Average was up 54.56 points, or 0.23%, at 24,276.55, the S&P 500 was up 1.69 points, or 0.06%, at 2,932.01.
The Nasdaq Composite was up 31.42 points, or 0.34%, at 9,223.77, rising for the seventh straight day.
Among other stocks, Simon Property Group Inc jumped 4.3% as the biggest U.S. mall operator said it would have about half of its more than 200 retail properties in the country open within the next week.
Smaller rival Macerich Co climbed 4.3% as it expected to open a vast majority of its properties by mid-June.
Declining issues outnumbered advancers for a 1.18-to-1 ratio on the NYSE and a 1.07-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and two new lows, while the Nasdaq recorded 71 new highs and 18 new lows.
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