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April 30, 2020, 4:40 p.m. EDT

Dow, S&P 500 end last session in April lower, but notch best monthly gains since 1987

Big tech stocks Apple, Facebook and Amazon book sharp gains

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By Mark DeCambre, MarketWatch , Andrea Riquier


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Apple will report earnings Thursday.

U.S. stocks ended lower Thursday but off their worst levels of the session as investors weighed mixed corporate earnings and a report that the federal government was considering retaliating against China for its handling of the coronavirus.

How are benchmarks faring?

The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.17% finished 288.14 points, or 1.2%, lower at 24,345.72, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.06% lost 27.08 points, or 0.9%, to close at 2,912.43. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.87%  shed 25.16 points, off 0.3%, to end at 8,889.55.

The small-capitalization Russell 2000 index /zigman2/quotes/210598147/delayed RUT +1.59% finished down 3.7% at 1,310.66.

For the month, the Dow gained 11.1%, while the S&P 500 ended April up 12.7%, representing their best monthly gains since 1987 and their best April performances since 1938, according to Dow Jones Market Data.

The Nasdaq booked a monthly return of 15.5%, its best such advance since 2000 and the best April for the technology-laden index on record, while the Russell 2000 rose 14% for its best month since 2011 and its best April since 2009.

What’s driving the market?

The pain facing many Americans was on stark display Thursday morning. Nearly 3.8 million people filed for unemployment benefits for the first time in the most recent week, the Labor Department said. That topped the consensus forecast among economists surveyed by MarketWatch, even as last week’s report was raised. The new tally shows that over 30 million Americans have lost their job since the start of the coronavirus pandemic.

Personal income also fell sharply in March as workers received less compensation, the government said Thursday. Incomes dropped 2% in March, while disposable income also fell 2%. Consumer spending slumped 7.5% last month as households stayed at home. Meanwhile, a measure of business conditions in the Chicago area fell sharply in April to its lowest level since 2009.

Eurozone first-quarter GDP fell 3.8% compared with the fourth quarter. European data is reported on a quarter-on-quarter basis, so on an annualized basis, the economy fell 14.4%, worse than the U.S. annualized decline of 4.8%.

Stocks took a leg lower late morning after the Washington Post reported that the Trump administration was considering retaliatory actions against the Chinese government for its lack of transparency about the seriousness of the outbreak.

Earlier in the session, the European Central Bank provided a monetary-policy update, leaving interest rates unchanged, as expected, while further easing conditions for its existing targeted long-term refinancing operations, or TLTROs, and introducing a new program of non-targeted pandemic emergency longer-term refinancing operations, or PELTROs. In a press conference after the ECB’s decision, the central bank’s chief said economic growth in the Eurozone could slump much harder.

Read: ECB’s emergency response to coronavirus economic crunch applauded — but more help likely to be needed

On Wednesday, Fed Chairman Jerome Powell emphasized the limits of central banks to tackle the pandemic and pointed to lawmakers to do more to control infections and provide sufficient funding to restart the economy.

Check out : Federal Reserve chair Powell will put pedal to the metal to help economy: live blog recap

But central-bank interventions are providing a support for stocks, even if market outperformance feels disconnected from real economic fundamentals.

“Markets are looking through this horrendous air pocket of economic fundamentals and leaning on the Fed,” said Chris Dillon, capital markets investment specialist for T. Rowe Price. “We’re all MMTers now,” he added, referring to Modern Monetary Theory, the idea that government budget deficits don’t matter.

And investors have taken heart from strong corporate reports from Facebook, Microsoft and Tesla late Wednesday, perhaps reflecting more optimism about the ability of technology stocks to be “on the right side of COVID-19,” Dillon said.

The concentration of stock-market gains among tech heavyweights has been somewhat concerning, Dillon said. "Narrow market leadership can only carry you so far.” But signs of life among small-cap stocks was heartening, he said. Small-cap stock performance is often seen as a measure of investor confidence in the economy.

Read: The ‘Great Repression’ is here and it will make past downturns look tame, economist says

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,433.48
+46.50 +0.17%
Volume: 324.93M
Aug. 7, 2020 5:10p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,351.28
+2.12 +0.06%
Volume: 2.28B
Aug. 7, 2020 5:10p
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
11,010.98
-97.09 -0.87%
Volume: 3.85M
Aug. 7, 2020 5:16p
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/zigman2/quotes/210598147/delayed
US : US Composite
1,569.18
+24.56 +1.59%
Volume: 0.00
Aug. 7, 2020 7:11p
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