U.S. stocks abruptly turned lower Friday after Apple said it is closing some stores in Florida, Arizona and other states due to a rise in coronavirus cases, stoking fears of another lockdown.
The Dow Jones Industrial Average fell 123 points, or 0.5%, in afternoon trading. It had been up more than 300 points after the opening bell.
The S&P 500 dropped 0.3%, while the tech-heavy Nasdaq Composite was down less than 0.1%.
All three indexes are still on track for weekly gains of at least 1%, fueled by central-bank stimulus efforts and cautious optimism that the economy is recovering from the worst fallout of the pandemic.
The market has been sensitive to any indications that a second wave of infections is under way, out of fear that it could lead to new lockdowns, reversing the trend toward reopening the U.S. economy that has lifted the stock market in recent weeks.
Apple said Friday that it is temporarily shutting 11 stores across Florida, Arizona, North Carolina and South Carolina, following spikes in Covid-19 infections. The market sold off sharply on the news, with the Dow at one point swinging more than 600 points off its morning high.
Ten of the S&P 500's 11 sectors were negative Friday. Financials, real estate and industrials were among the worst-performing sectors, while health care was the only sector in positive territory.
Shares of Apple dropped 1.5%. The stock had hit a record intraday high in the morning before the news of its store closures.
Shares of Marathon Petroleum gained 2.7% after The Wall Street Journal reported that the company is in discussions with potential buyers of its Speedway gas-station unit.
Shares of AMC Entertainment fell 2.4% in a volatile day of trading. The cinema chain reported plans late Thursday to reopen most of its movie theaters in July, sending its stock up. But shares turned lower after the company said it would require moviegoers to wear masks, a reversal of its earlier stance.
CarMax shares tumbled 6.8% after the auto retailer reported that its profit for the last quarter contracted sharply amid the pandemic.
Weaker-than-expected job growth in September sent a signal that the sharp economic recovery off the coronavirus shutdown may be hitting a wall.
The Labor Department reported Friday that nonfarm payrolls increased by 661,000 in September, held back by declines in government employment and an exodus of workers from the labor force.
In normal times, that type of hiring pace would be considered a sign of a robust job market. The total, in fact, would have been the best month the U.S. had seen since 1983 – if these were normal times and not amid the Covid-19 era that has changed the benchmarks by which economic data is measured.
As it stood, the total was a fairly wide miss from Wall Street’s expectation of 800,000. The unemployment rate fell more than expected to 7.9%, but that was mostly due to a sharp decline in labor force participation.
Taken together, the report is a potential early flare from the business community that a rebound during which 11 million jobs were refilled in four months could be petering out.
“This report is an illusion of progress at a time when we needed accelerating gains in the labor market. The number of jobs added this month is just not enough,” said Nick Bunker, economic research director at job placement site Indeed. “This report is massively concerning. We are not where we need to be, nor are we moving fast enough in the right direction as we head into fall.” Data has looked good, but ...
The timing of the report is inauspicious in that most of the backward-looking economic indicators have been solid.
Housing stands out the most as the residential market is struggling to find supply to meet all the demand. Retail sales have been solid, and manufacturing is back into expansion after heading in the wrong direction for a few months.
The Citi Economic Surprise Index, which measures the data versus Wall Street expectations, has cooled since soaring to its historic peak in mid-July but still is above anything before the pandemic.
Most tellingly, consumer confidence remains strong. But that may not last, particularly if the jobs numbers weaken and the stock market continues to struggle.
“The real question in my mind is why consumers are so upbeat and why they remain upbeat. Until I can answer that, I don’t know how persistent the expansion is going to be,” said Drew Matus, chief market strategist at MetLife Investment Management. “People are underestimating how long the impact of what we’ve been through is going to last. In that regard, there’s some downside risk to the outlook.”
At the moment, the economy remains mostly in a rally mode off the unprecedented slump in the second quarter brought on by the coronavirus-induced shutdown. GDP is projected to increase by as much as a 32% annualized pace in the second quarter after tumbling 31.4% in Q2 and 5% to start the year.
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