By ALEX VEIGA AP Business Writer
Stocks fell Friday morning on Wall Street as investors waited for Congress to deliver a big financial rescue package aimed at cushioning ailing businesses and households from the coronavirus crisis.
The selling erased some of the market's gains after a strong three-day rally that has the major stock indexes on track for their first weekly gain in three weeks. Even after the winning streak this week the market is down 25% from the peak it reached a month ago.
The S&P 500 was down 3.5% in morning trading, but is up just above 10% for the week. The benchmark index shot up 17% over the previous three days as traders became hopeful that Congress would pass the $2.2 trillion economic aid package. The Dow Jones Industrial Average dropped 3.9%. It's up more than 13% for the week. European markets also fell. Asian markets closed mostly higher.
The House of Representatives was due to vote on the unprecedented economic rescue package later Friday. The bill, which the Senate passed on Thursday, includes direct payments to households, aid to hard-hit industries like airlines and support for small businesses. The business shutdowns that have swept across the country forced 3.3 million Americans to apply for unemployment aid last week, a historic spike.
Investors had appeared to shrug off the miserable news on unemployment Thursday.
"Rallies don't last forever and clearly investors are happy to call time on this one as we head into another uncertain weekend," Craig Erlam of Oanda said in a report.
New government data Friday showed U.S. consumer spending inched up 0.2% last month, matching January's gain. But economists expect spending will be down sharply in coming months, reflecting the impact of business shutdowns and layoffs.
The prospect of meaningful financial help to offset the economic damage caused by the coronavirus mitigated some of the concerns about the steep job losses the economy is beginning to see. But barring unexpected good news, it's a matter of time before this stimulus-fueled rally fades, analysts said.
Congress' efforts to deliver financial relief for Americans are taking on more urgency as the outbreak continues to widen. The number of cases in the U.S. has now surpassed those in China and Italy, climbing to more than 86,000 known cases, according to Johns Hopkins University. The worldwide total has topped 550,000, and the death toll has climbed to more than 25,000, while more than 127,000 have recovered.
For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, or death.
Despite strong rallies this week, analysts say further big drops are to be expected until there have been enough sustained gains in the market, and progress in fighting the pandemic, to ease investors' fear of further declines.
Investors have yet to get a clear picture of exactly how badly the crisis has hurt corporate profits. Very few companies have dared to issue forecasts capturing the damage, though traders are girding for discouraging results in the next few weeks as earnings reporting season begins.
The losses were widespread Friday, with cruise lines, hotel operators and big retailers among the biggest losers. Norwegian Cruise Line, Royal Caribbean and Carnival led the decliners in the S&P 500. The industry has been among the hardest hit by the economic fallout from the coronavirus. The three cruise operators are down between 70% and 77% so far this year.
In other trading, benchmark U.S. oil was down 5.8% to $21.30 a barrel. Goldman Sachs has forecast that it will fall well below $20 a barrel in the next two months because storage will be filled to the brim and wells will have to be shut in.
The yield on the 10-year Treasury fell to 0.74% from 0.81% late Thursday. It had been as low as 0.77% just before the jobless report was released. Lower yields reflect dimmer expectations for economic growth and greater demand for low-risk assets.