Wall Street drifts as tech stock gains offset other losses

STAN CHOE, DAMIAN J. TROISE and ALEX VEIGA

AP Business Writers

NEW YORK (AP) — U.S. stock indexes are drifting on Wednesday, as more gains for big tech companies help make up for weakness elsewhere across Wall Street.

The S&P 500 was 0.1% higher, as of 1:30 p.m. Eastern time, after swinging between an earlier gain of 0.8% and a loss of 0.3%. Treasury yields and oil prices were also holding relatively steady. But caution still hung over markets, as gold nudged toward its highest price since 2011.

The up-and-down trading was reminiscent of the market's moves over the last month, where Wall Street has largely churned in place. Optimism is rising about a reopening economy, but worsening coronavirus infection levels across much of the U.S. South and West threaten to derail the budding economic improvements.

"The reopening of the economy got a little bit too optimistic, too ahead of itself," said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management. "It's a perfect excuse to pull back a bit more to reality."

The majority of stocks in the S&P 500 were lower Wednesday afternoon, with several chemical and travel-related companies taking the hardest hits.

United Airlines lost 3.3% following news that it will send layoff warnings to nearly half its U.S. staff as the airline industry struggles to lure fliers back to the skies.

Offsetting those losses were gains for several tech-oriented giants, which investors continue to pile into on expectations that they can grow almost regardless of the economy.

Apple rose 1.7%, and Amazon added 1.8%, while Twitter jumped 10.5%.

That helped drive a 0.8% rise for the Nasdaq composite, the largest gain among major U.S. indexes. The Dow Jones Industrial Average was down 36 points, or 0.1%, at 25,854.

"It's actually kind of a quiet day, doesn't appear to be a lot of direction," said David Joy, chief market strategist at Ameriprise Financial.

"In the absence of an obvious catalyst, the market is just resorting back to what it knows: Technology stocks have rewarded me well, so let's continue to plow into those," he said.

The mixed trading follows Tuesday's snapback, when the S&P 500 fell 1.1% to break a five-day winning streak. The selling accelerated late in the day, and analysts say investors were likely cashing in on recent gains given the uncertainty that lies ahead for markets.

This week may be a relatively quiet one for markets, with few headline economic reports left on the schedule other than Thursday's update on unemployment claims. Next week may have more action, when a couple dozen companies in the S&P 500 are scheduled to report their earnings results for the second quarter.

Expectations for the upcoming earnings season are dismal. More important for investors, analysts say, may be what companies say about how they plan to navigate the rest of the year and even 2021, when profits are expected to grow again.

Treasury yields ticked higher. The yield on the 10-year Treasury rose to 0.65% from 0.64%. It tends to move with investors' expectations for the economy and inflation.

In Asian stock markets, Japan's Nikkei 225 slipped 0.8%, Hong Kong's Hang Seng added 0.6% and South Korea's Kospi slipped 0.2%. The biggest action was in Shanghai, where stocks jumped another 1.7%. That brings their gain to 14% for July so far, raising concern that speculators are driving the market.

In Europe, the German DAX lost 1%, and France's CAC 40 dropped 1.2%. The FTSE 100 in London slipped 0.5%.

Benchmark U.S. crude was up 0.7% at $40.91 per barrel. Brent crude, the international standard, gained 0.5% to $43.30 per barrel.

Gold added 0.6% to $1,820.90 per ounce. Its price tends to rise with worries about the economy and inflation, and it has climbed more than $300 since mid-March. Its rise, alongside the stock market's rally, highlights for critics the disconnect between Wall Street and the economy.

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AP Business Writer Yuri Kageyama contributed.