Stocks drop after Fed's latest stress test of major banks

Stocks drop after Fed's latest stress test of major banks”

Wall Street's three major indexes on Wednesday suffered their biggest daily percentage drop in nearly two weeks as a surge in US coronavirus cases intensified fears of another round of government lockdowns and worsening economic damage.

Stocks rose on Wall Street Thursday after a choppy start as investors weigh a mixed batch of economic reports highlighting the damage that the coronavirus lockdowns have inflicted on the economy.

Gains were relatively small because Washington delivered no more than was expected, said Stephen Innes of AxiTrader a report.

"Investors are finding it hard to see the marginal or incremental new support", said Innes. New Zealand, Singapore and Jakarta also advanced.

Andrew Smith, chief investment strategist, Delos Capital Advisors, in Dallas, Texas, said of the stock market: "We believe investors should prepare for continued volatility as the stock market digests the continued increase in COVID-19 infection rates and the impressive rally from the March 23 market lows".

"They don't seem to be going into lockdown, they want to avoid that as much as possible", said Jonas Golterman, senior markets economist at Capital Economics. COVID-19 hospitalizations and caseloads have hit new highs in more than half a dozen US states. Forecasters expect a worse decline during the quarter that ends next week. It tends to move with investors' expectations for the economy and inflation. But some states have reimposed curbs after a resurgence in new infections. Coronavirus hospitalizations and caseloads have hit new highs in over a half-dozen USA states.

The Dow was down more than 400 points, or 1.6%, while S&P 500 fell 1.2% and the Nasdaq dropped 1.4%.

Despite shedding its gains for June, the S&P 500 still is on pace for its best quarter since the fourth quarter of 1998.

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The Dow Jones Industrial Average rose 1.2% to 25,745.60. The Nasdaq, which hit an all-time high earlier this week, gained 1.1%, to 10,017.

Technology and health care stocks also helped lift the market, outweighing losses in utilities.

Macy's slid 4.6% after the department store operator announced it is laying off 3,900 corporate staffers, or roughly 3% of its overall workforce, as the pandemic takes a financial toll on the retailer's sales and profits.

On a more encouraging note, the government said orders to American factories for big-ticket goods rebounded last month from a steep pullback in April and March as the economy began to slowly reopen. Bank of America and JPMorgan Chase both dipped more than 1.5%. It measures the daily stock price movements of 30 large, publicly-owned US companies.

The Federal Reserve will release results of the lenders' stress tests after the markets close.

In Asia, South Korea's Kospi Composite lost 2.3% and Japan's Nikkei 225 benchmark dropped 1.2%.

In commodities, Brent crude, the global benchmark for oil prices, lost 1.8% to $39.80 a barrel, extending declines as new worries about the coronavirus added to reports of unexpectedly high USA inventories. It closed at $41.05 the previous session.

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