March 5, 2021

Stocks Lose Momentum

Stock indexes had powered ahead on Tuesday, the second consecutive day of gains, as investors scooped up stocks that had become cheaper after recent sell-offs.

But the markets were not as certain on Wednesday, wavering between gains and losses. Gold fell, the benchmark Treasury yield rose slightly to 2.203 percent and financial stocks declined.

A government report Wednesday that showed that durable goods orders rose in July provided little stability. Analysts noted that, considering recent talk of another recession, it would take more than one economic data point to convince investors that the economy was on solid footing.

“Any one report is not going to have real significant impact because the market is looking for a breadth of data,” said Stuart Freeman, chief equity strategist for Wells Fargo Advisors.

Some investors were betting that weak economic data would support the likelihood of further stimulus from the Federal Reserve, whose chairman, Ben S. Bernanke, will speak at the Fed’s symposium at Jackson Hole, Wyo., on Friday. Mr. Bernanke had outlined stimulus options at the same meeting in 2010 in response to the slowdown of the economy.

While those expectations had driven some of the gains on Tuesday, there was little follow-through on Wednesday.

In early afternoon trading, the Standard Poor’s 500-stock index was down 0.2 percent and the Dow Jones industrial average was down 0.2 percent. The Nasdaq composite index was down 0.6 percent.

“There is some trading going on with the expectation that the Fed is going to make some comments that they have got something up their sleeve,” Mr. Freeman said. “I think we are going to be in this volatile sideways moving market” for some time.

Gold, which sagged sharply on Tuesday only to rise in Asian trading, fell further on the Comex exchange. It was down $69.70, or 3.8 percent, to $1,788.60 an ounce. The metal had been used as a safe haven in recent market volatility and risen to record nominal highs.

Jeffrey Nichols, the managing director of the American Precious Metals Advisors, said that the run-up in gold had been “so large in magnitude and fast” that “to have a significant correction here really makes sense.”

“Some of the rally was a function of speculative demand by short-term-oriented institutional traders,” he said, adding that the consequence would be for them to sell, take profits and move on to other instruments. But he said that the long-term economic outlook was basically unchanged.

The Commerce Department reported earlier that overall orders for durable goods rose 4 percent last month, the biggest increase since March. But a category that tracks business investment plans fell 1.5 percent, the biggest drop in six months.

Abigail Huffman, director of research at Russell Investments, said that some of Wednesday’s early gains may have been a result of the durable goods numbers and the market’s momentum from the previous day.

“It is definitely a wait-and-see feeling preceding the Fed meeting,” she said.

Stocks in Europe rose for a third day, after declines in Asian markets, as some investors bet that the Federal Reserve would act soon to strengthen the economy and that the sharp stock market drops earlier this month were overdone.

Adrian Darley, head of European equities at Ignis Asset Management, said that even though some investments now looked cheap, investors lacked confidence.

“There are remaining concerns about global economic growth slowing down,” Mr. Darley said. “The question is whether the sell-off has gone too far. Companies recognize that there is a lot of value out there but investors don’t have a lot of confidence.”

The Euro Stoxx 50 index closed 1.8 percent higher in Europe, while Germany’s DAX index increased 2.7 percent and France’s CAC 40 index rose 1.8 percent. Stock markets in Asia slipped as investors took in the downgrade by Moody’s Investors Service of its rating on Japanese government debt and shrugged off both Tuesday’s surge on Wall Street and fresh efforts by the Japanese government to prop up feeble economic growth.

The Nikkei 225-stock index rose in early trading, but quickly gave up those gains to end the day down 1.1 percent at 8,629.61 points. Similarly, the yen remained persistently strong in the international currency markets, hovering at about 76.60 yen per U.S. dollar.

Moody’s decision to lower its rating of Japan by one notch came as little surprise, as Standard Poor’s had announced a similar downgrade in January and the economic and political challenges facing the country are well known.

Elsewhere in the Asia-Pacific region, the markets slipped, ignoring the firm rally in the American markets during the previous day. Analysts cautioned that the lingering uncertainties about the economy in the United States and debt woes in Europe remained in place and were likely to produce more volatility in coming months.

The key index in South Korea closed down 1.2 percent, the Taiex in Taiwan fell 0.6 percent, and the S. P./ASX 200 in Australia finished 0.1 percent lower.

In Hong Kong, the Hang Seng index was 1 percent lower by mid-afternoon, the Straits Times index in Singapore fell 0.4 percent, and in India, the Sensex was down 0.8 percent by the afternoon.

Julia Werdigier reported from London and Bettina Wassener contributed reporting from Hong Kong.

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