I’ve been wondering about this week’s rallies in view of the fact that Friday’s labor report is expected to be horrendous.  (Of course that just means that if the unemployment rate is not as terrible as they’re expecting, there’ll be yet another rally.)  So today became the day that investors took a step back as a precautionary measure against bad news tomorrow.  The Dow spent much of the day in the red, down more than 100 points at times but finally rallying at close to squeak out a very modest 11 point gain, making it the only index to end in the black.  Some call it profit-taking but this has happened many times before when bad news is expected so it’s more accurate to call it simple caution.  The airline index got a big boost today along with EBay and Charles Schwab, which is buying TD Ameritrade.  The cautionary sell off was brisk.  Volume was way above recent averages at nearly 14.5 billion. 

thu  JUNE 4, 2020 / 6:09 pm 

S&P 500 closes down, snapping four-day rally

Stephen Culp

DJ:  26,269.89  +527.24       NAS: 9,682.91  +74.54        S&P: 3,122.87  +42.05     6/3

DJ:  26,281.82  +11.93         NAS: 9,615.81  -67.10         S&P: 3,112.35  -10.52      6/4

(Reuters) - The S&P 500 lost ground on Thursday as investors took profits in advance of Friday’s jobs report, ending a four-day rally driven by rising economic sentiment.  The Nasdaq joined the S&P 500 in negative territory, while the blue-chip Dow posted a nominal gain.

“We were pretty overvalued going into this week,” said Chris Zaccarelli, chief investment officer, Independent Advisor Alliance, Charlotte, NC. “It’s not surprising to see a pullback.”  Still, all three major indexes have shown remarkable resilience since their late March plunge, with the Nasdaq, the S&P 500 and the Dow about 2%, 8% and 11% below their respective record highs reached in February.  “This market has gone up so far so fast there’s a lot of people saying, ‘I’m going to take a little profit,’” said Jim Paulson, chief investment strategist at The Leuthold Group in Minneapolis.

Economic data showed the number of Americans filing for unemployment benefits dipped below 2 million for the first time since mid-March, and plummeting international commerce resulted in a net widening of the U.S. trade gap.  Friday’s much-anticipated jobs report from the Labor Department is expected to show the U.S. unemployment rate sky-rocketing to a historic 19.7%.

Violent protests against the death of George Floyd appeared to abate overnight as prosecutors brought new charges against the officers implicated in the killing.  The European Central Bank approved a stimulus package that surpassed expectations, nearly doubling the size of its Pandemic Emergency Purchase Plan to 1.35 trillion Euros.  Its American counterpart, the U.S. Federal Reserve, is due to meet next week for its two-day policy meeting.

The Dow Jones Industrial Average rose 11.93 points, or 0.05%, to 26,281.82, the S&P 500 lost 10.52 points, or 0.34%, to 3,112.35 and the Nasdaq Composite dropped 67.10 points, or 0.69%, to 9,615.81.  Of the 11 major sectors in the S&P 500, all but financials, industrials and materials were in the red in a continuation of a rotation in cyclicals.

American Airlines Group Inc announced it would beef up its flight schedule in July to 55% of its year-ago capacity as the U.S. economy reopens, sending its shares soaring 41.2%.  The hard-hit commercial airline industry also jumped on the news, with the ARCA Airline index gaining 10.1%.  Global online commerce platform EBay Inc rose 6.3% after raising current quarter forecasts due to a surge in customer orders.  The Department of Justice gave anti-trust approval for Charles Schwab Corp’s purchase of TD Ameritrade Holding Corp, sending their shares up 5.5% and 9.0%, respectively.  J.M. Smucker Co fell 4.8% after the packaged food company forecast a decline in full-year sales.

Advancing issues outnumbered declining ones on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored advancers.  The S&P 500 posted 16 new 52-week highs and no new lows; the Nasdaq Composite recorded 52 new highs and 10 new lows.

Volume on U.S. exchanges was 14.46 billion shares, compared with the 11.68 billion average over the last 20 trading days.