• The Star Staff

Wall Street retreats as business activity slows

Wall Street’s main indexes fell on Wednesday as data showing a slowdown in domestic business activity and a stalemate in Congress over more fiscal stimulus raised fears of a choppy economic recovery from a pandemic-driven recession.

Ten of the 11 major S&P indexes were down, with energy .SPNY - already the worst performing sector this year - leading declines.

Hopes of a stable economic rebound and historic stimulus drove a rally in U.S. stocks since a coronavirus-driven crash in March, but doubts over the next coronavirus relief bill and a selloff in heavyweight technology-related stocks have weighed on sentiment this month.

With Congress at an impasse over the bill, Federal Reserve Chair Jerome Powell said on Wednesday the central bank was not planning any “major” changes to its Main Street Lending Program.

“The longer we go without more stimulus, the harder it will be to sustain the gains in the economy,” said Willie Delwiche, investment strategist at Baird in Milwaukee.

Data from IHS Markit showed gains at factories were offset by a slowdown in the broader services sector this month, suggesting a loss of momentum in the economy at a time when concerns are rising about a potential surge in COVID-19 cases heading into the colder months.

Meanwhile, the U.S. Justice Department unveiled a legislative proposal that seeks to reform a legal immunity for internet companies and follows through on President Donald Trump’s bid from earlier this year to crack down on tech giants.

Wall Street favorites including Facebook Inc FB.O, Apple Inc AAPL.O, Google-parent Alphabet Inc GOOGL.L and Amazon.com Inc AMZN.O, which have borne the brunt of recent losses, were down between 0.3% and 2.3% in early afternoon trading.

Tesla Inc TSLA.O, another Wall Street darling this year, tumbled 8.2% after Chief Executive Officer Elon Musk failed to impress with his promise to cut electric vehicle costs at the much awaited “Battery Day” event on Tuesday.

At 12:56 p.m. ET, the Dow Jones Industrial Average .DJI was down 0.26%, the S&P 500 .SPX was down 0.59% and the Nasdaq Composite .IXIC was down 1.04%.

An index of value-linked stocks .IVX such as industrials outperformed growth-oriented sectors .IGX, suggesting “investors (are) getting comfortable with the belief that the turnaround story is underway for the economy,” said Lindsey Bell, chief investment strategist at Ally Invest in Charlotte, North Carolina.

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