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European shares moved modestly higher on Wednesday, perhaps inspired by Wall Street’s record-setting performance on Tuesday when the S&P 500 hit a new high. Futures in New York signaled the market would continue rising later this morning.
Most stock indexes in Europe were moving slowly into positive territory, with the benchmark Euro Stoxx 600 0.2 percent higher in late morning trading. In Asia, Chinese markets generally fell, with the Shanghai Composite finishing 1.2 percent lower. But outside of China, Japan’s Nikkei gained 0.3 percent while South Korea’s Kospi closed the session 0.5 percent higher.
Oil futures slumped, pressuring shares in oil giants like Royal Dutch Shell and BP amid concerns that an upswing in coronavirus cases in Europe would weigh on demand for oil. Similar concerns drew investors to the United States 10-year Treasury note, which gained in price.
The markets continue to be buffeted in different directions, providing investors with reasons for caution and optimism. The S&P 500’s performance on Tuesday, overcoming (or overlooking) the ravages of the pandemic to hit a new high, was partly a result of the growth and influence of America’s tech giants — Apple, Amazon, Alphabet, Microsoft and Facebook — which are now the largest publicly traded companies in the United States. They have benefited greatly from the pandemic, providing a massive lift for the S&P 500 index.
But worries about the spread of the virus continue. In the United States, where the number of new cases has slowed, college campuses are finding flare-ups of infection, forcing the University of Notre Dame and others to abandon in-person classes. In Alabama, the state has a comprehensive plan to prevent major outbreaks from disrupting the 160,000 students streaming on to its campuses. The approach will be put to the test over the next couple of weeks.
As the economy contracts and many companies struggle to survive, America’s biggest tech companies are being lifted to new heights, putting the industry in a position to dominate business in a way unseen since the days of railroads.
A rally in technology stocks elevated the S&P 500 index to a record high on Tuesday even as the pandemic crushes the broader economy. The stocks of Apple, Amazon, Alphabet, Microsoft and Facebook, the five largest publicly traded companies in the United States, rose 37 percent in the first seven months this year, while all the other stocks in the S&P 500 fell a combined 6 percent, according to Credit Suisse.
Those five companies now constitute 20 percent of the stock market’s total worth, a level not seen from a single industry in at least 70 years. Apple’s stock market value, the highest of the bunch, is nearly $2 trillion — double what it was just 21 weeks ago.
The tech companies’ dominance of the stock market is propelled by their unprecedented reach into our lives, shaping how we work, communicate, shop and relax. That has only deepened during the pandemic, and as people shop more frequently on Amazon, click on a Google or Facebook ad or pay up for an iPhone, the companies receive a greater share of spending in the economy and earn ever larger profits.
“Covid was the perfect positive storm for these guys,” said Thomas Philippon, a professor of finance at New York University.
Strict lockdowns ended weeks ago, but many people across the country are still avoiding malls, restaurants and other businesses. The shift in behavior points to a reshaping of American commerce, fueling questions about the strength and speed of the economic recovery as the coronavirus continues to spread.
Through the end of last week, daily visits to businesses were down 20 percent from last year, according to a New York Times analysis of foot traffic data from the smartphones of more than 15 million people. After an initial plunge in the spring, consumer habits have been slow to recover, the data shows.
Visits to businesses have, for example, rebounded more in Alabama, a largely conservative state, than in the more liberal Vermont. But in comparison with last year, people in Vermont have been shopping again more than people in California, where the virus remains a greater threat. Everywhere, trips to pharmacies and hospitals have fallen, while those to gas stations and convenience stores have held steady or even increased.
How people spend will determine which companies survive, and who ultimately keep their jobs. Continued weakness at brick-and-mortar stores has enormous implications for an economy that has had years of gains wiped away in the months since the pandemic hit. The disparities in how people shop hint at a prolonged, uncertain and uneven recovery.
Target on Wednesday reported a surge in sales in the second quarter, as people continued to turn to big box retailers for supplies while pandemic restrictions left many housebound. Comparable store sales, including online and in store, were up 24.3 percent, a quarterly record. Comparable digital sales surged 195 percent in the quarter, which ended Aug. 1.
Amazon said on Tuesday that it would hire 3,500 white-collar employees across the country, including 2,000 in New York, following through on plans it had largely put in place before the coronavirus made office towers empty as employees worked from home. The new jobs will fill a lot of office space that the company acquired before Covid-19 took hold in the United States. In early March, Amazon bought the iconic Lord & Taylor building on Fifth Avenue from the co-working company WeWork.