Wall Street slumps after rise in layoffs, tech weakness

NEW YORK — Wall Street stumbled Thursday, undercut in part by a discouraging report showing that layoffs are picking up across the country with coronavirus counts. Technology stocks had the sharpest drops after a better-than-expected profit report from Microsoft wasn’t enough to satisfy investors expecting even more. They helped drag the S&P 500 down 1.2%. The index had its first loss in five days and its worst in four weeks. Other stock indexes around the world were mixed, while gold rose again through the uncertainty to touch its highest price in nearly nine years. Treasury yields and oil prices fell.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.

Wall Street is stumbling on Thursday, undercut by a discouraging report showing that layoffs are picking up across the country with coronavirus counts.

Technology stocks had the sharpest drops after a better-than-expected profit report from Microsoft wasn’t enough to satisfy investors expecting even more, and they helped drag the S&P 500 down 1.1% in afternoon trading. The index is on pace for its first loss in five days and potentially its worst in four weeks.

The Dow Jones Industrial Average was down 340 points, or 1.3%, at 26,665, as of 3 p.m. Eastern time, and the Nasdaq composite fell 2.1%, with losses accelerating through the afternoon. Other stock indexes around the world were mixed, while gold rose again through the uncertainty to touch its highest price in nearly nine years.

The setback wiped away about three-quarters of the S&P 500’s gains from earlier in the week. Overall, the market is in a holding pattern and will likely remain there as investors gauge the path of the pandemic, business reopenings and the government’s reaction to them, said Jason Pride, chief investment officer of private wealth at Glenmede.

“We’re going to be dealing with that until we get a vaccine or cure, whether we like it or not,” he said.

“I don’t envy the people who have to make decisions regarding risk of this spreading versus the risk to people’s livelihoods. It’s a hard choice.”

Thursday’s headline economic report was one that has taken on much more importance for markets through the pandemic: the weekly tally of workers filing for unemployment benefits. Last week, the total rose by 109,000 to a little more than 1.4 million.

It breaks a stretch of 15 straight weeks of improvements, a streak that had raised investor optimism that the recession could prove to be shorter than expected. It comes as coronavirus counts continue to rise across much of the Sun Belt, leading to more business closures.

Among the market’s heaviest weights was Microsoft, which fell 4% despite reporting a bigger quarterly profit for the spring than Wall Street expected. It’s a relatively rare stumble for the giant, which has cruised higher through much of the pandemic on expectations that it can continue to grow whether the economy is locked down or not.

But with the rise comes higher expectations, and analysts pointed to a 47% growth rate reported for Microsoft’s Azure cloud business during the quarter. That fell short of analysts’ forecast.

Because Microsoft is the largest or second-largest U.S. stock by market value, depending on the day, its movements have an outsized effect on indexes like the S&P 500. Apple, the other titan that trades off the No. 1 spot for market value with Microsoft, was also down 4.5%. Other formerly high-flying tech-oriented giants also stumbled, including a 3.5% drop for Amazon. Those three stocks alone accounted for half the loss of the S&P 500.

On the opposite end, though, were several big companies that reported more encouraging trends in their business during the spring than Wall Street expected.

Whirlpool jumped 8.3% for the biggest gain in the S&P 500 after the appliance maker reported a profit for the spring that was more than double what analysts expected. It also said that it saw demand recover in markets around the world in June, while saying it doesn’t expect sales over the course of 2020 to drop as much as it had earlier forecast.

PulteGroup rose 3.8% after the home builder also reported a bigger quarterly profit than Wall Street expected. Twitter rose 3.9% after its quarterly report showed the strongest growth in its history for users.

Investors are also hoping that Congress can agree on more aid for out-of-work Americans just as an extra $600 in weekly unemployment benefits is set to expire.

Republicans in the Senate were set to unveil their proposals for a $1 trillion COVID-19 rescue package Thursday morning, but that got delayed. Finding a compromise with the Democratic-controlled House of Representatives could also be more difficult than it was in March, when Congress produced a $2 trillion rescue package.

Thursday’s trading is a microcosm of the volatile moves that have dominated the market in recent weeks.

Helping to lift stocks have been several reports on the economy and corporate profits that showed improvements from the spring and were better than expected. That’s layered on top of massive aid for the economy promised by the Federal Reserve, including nearly zero interest rates.

But weighing markets down is a long list of challenges beyond the worsening coronavirus counts across much of the United States. They include worries about rising tensions between the United States and China, the world’s largest economies, and the effect of the upcoming U.S. elections.

The yield on the 10-year Treasury dipped to 0.57% from 0.59% late Wednesday. It tends to move with investors’ expectations for the economy and inflation.

Gold for delivery in August rose $24.90 to settle at $1,890.00 per ounce. Benchmark U.S. crude fell 83 cents to settle at $41.07 per barrel.

In Europe, stock indexes were mixed. Germany’s DAX index was virtually flat, while France’s CAC 40 slipped 0.1%. Britain’s FTSE 100 gained 0.1%.

Earlier, in Asia, the Kospi in Seoul lost 0.6% after South Korea reported that its economy contracted 3.3% in April-June. Hong Kong’s Hang Seng gained 0.5%, and stocks in Shanghai dipped 0.2%.

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AP Business Writer Elaine Kurtenbach contributed.