NEW YORK (AP) — Wall Street’s major stock indexes fell on Friday after President Donald Trump tested positive for the coronavirus, but the losses ended up milder than investors braced for early in the morning.
The S&P 500 slumped 1.7% as soon as trading began, only to churn through another turbulent session. By the end of the day, it had trimmed its loss to 1%, down 32.38 points at 3,348.42. Despite the drop, most of the stocks in the index were higher, and the S&P 500 still managed to close out its first winning week in the last five.
The paring of losses came as optimism rose that Washington may be able to get past its partisanship to deliver more support for the economy. House Speaker Nancy Pelosi told airlines in the afternoon to stop furloughing workers because aid for them is imminent. She said a wider rescue package for the economy, one that investors have long been agitating for, could also perhaps be on the way.
The Dow Jones Industrial Average swung from a loss of 433 points to a gain of 44 points through the day. It ended at 27,682.81, down 134.09 points, or 0.5%.
Big technology stocks remained weak, and the Nasdaq composite fell 251.49, or 2.2%, at 11,075.02. It’s a sharp departure from much of the summer, when Big Tech stocks carried the market higher. The tech slump was also the main reason for the S&P 500′s drop.
Treasury yields ticked higher, though, and smaller stocks were also stronger than the rest of the market in a sign of optimism. The Russell 2000 index of small-cap stocks gained 8.09, or 0.5%, to 1,539.30.
Earlier Friday, markets appeared set for a much uglier day. Stock futures and Treasury yields tumbled after Trump tweeted overnight that he and First Lady Melania Trump had tested positive for COVID-19.
Analysts said some of the market’s movements could be explained by investors building up expectations for a Joe Biden victory of the White House, with Election Day a little more than a month away. That could mean higher tax rates and tighter regulations on companies, which would limit profits and hurt stock prices, though it could also raise the odds of more stimulus for the economy.
“To say this potentially could be a big deal is an understatement,” Rabobank said in a commentary. “Anyway, everything now takes a backseat to the latest incredible twist in this US election campaign.”
After the market closed, the White House announced that Trump was “fatigued” and will spend a “few days” at a military hospital on the advice of his physicians. The announcement said that the visit is precautionary and that Trump will work from the hospital’s presidential suite.
The White House also said Trump had been injected with an experimental antibody drug combination for the virus made by Regeneron. The company’s shares rose 3% in after-hours trading.
Trump’s positive COVID-19 test also highlights the continued spread of the pandemic. The potential for a further ramp up in virus infections as the weather turns colder is raising worries that governments may put some more restrictions on businesses.
Also stirring up the market’s movements Friday was the latest report on U.S. jobs growth, which is usually the headline economic data of each month but almost became an afterthought. Employers added fewer jobs last month than economists expected, the third straight month of slower hiring.
The slowdown is yet another sign that the recovery is trailing off, said Mike Zigmont, director of trading and research at Harvest Volatility Management. The numbers don’t inspire bullishness, but they could be a brighter signal for more help from Congress.
“If the conclusion is that the economic data disappoints, Wall Street may say that’s added incentive for the next stimulus deal to eventually go through and more quickly,” he said.
All the uncertainty is making an already shaky market even more so. Stocks have been swinging recently amid a raft of open questions for investors: Who will win the election, and what will it mean for the economy? Will the relationship between the world’s two largest economies, the United States and China, keep worsening? Did stocks get too expensive after their 60% surge to record heights through the summer, Big Tech in particular?
In recent days, the dominant question has been whether Washington will be able to get past its partisanship to deliver more aid to the economy.
Extra benefits for laid-off workers and other support for the economy that Congress approved in March has expired, and investors have been clamoring for more assistance. Layoffs have remained stubbornly high across the country, and parts of the economy have slowed with the support from Congress gone.
The House of Representatives passed a Democratic $2.2 trillion package Thursday night, but it has little chance of getting through the Republican Senate. Talks between Democrats and Republicans on a compromise are continuing, but skepticism is high.
Airlines have announced the furloughs of tens of thousands of workers, saying they need more support from Washington as demand for travel has vanished. After Pelosi said in the afternoon that some kind of aid was imminent, their shares shook off earlier losses to climb. American Airlines rose 3.3% and United Airlines climbed 2.4%.
The yield on the 10-year Treasury rose to 0.69% from 0.68% late Thursday, after pulling back from an earlier loss.
In Europe, stocks also trimmed their losses as the day progressed. Trading in Asia was thin, with markets in Shanghai and Hong Kong closed. The Nikkei 225 fell 0.7% after the Tokyo Stock Exchange resumed trading following an all-day outage due to a technical failure.
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AP Business Writer Elaine Kurtenbach contributed.
Copyright 2020 The Associated Press. All rights reserved.
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