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* Second quarter GDP figures show record contraction of 33%
* Unemployment claims also increased, although they were lower than expected
* Qualcomm, UPS, P&G go up after results
* Dow down 0.79%, S&P down 0.38%, Nasdaq up 0.34% (Early afternoon updates)
By Medha Singh and Devik Jain
July 30 (Reuters) – The S&P 500 and Dow fell on Thursday after the data painted a troubling picture of the economy, while President Donald Trump raised the possibility of delaying the Nov. 3 presidential election.
The U.S. economy suffered its biggest contraction since the Great Depression in the second quarter, as business activity abruptly stopped in efforts to stem the virus outbreak.
Unemployment claims also rose in the past week, adding to signs that the momentum of the economic recovery has slowed as coronavirus cases soared in the southern and western states of the U.S. .
Shortly after the data, Trump raised the idea of a delay in the election, an idea immediately rejected by both Democrats and fellow Republicans in Congress, the only branch of government with the authority to make such a change.
Wall Street’s major indices were headed for their fourth consecutive monthly gain, with the benchmark S&P 500 index roughly 4% below its all-time high in February.
“In recent months, markets have become detached from reality and are being driven by Fed purchases and positive momentum,” said Phil Toews, chief executive of Toews Corp in New York.
“Ultimately, buyers of high-yield stocks and bonds are going to conclude that the gains are there to justify these valuations, and regardless of the progress of vaccines or medical treatments in the next six months, we could expect a contraction in the Stock market”.
The tech-laden Nasdaq was up, powered by Qualcomm Inc after the chipmaker forecast fourth-quarter revenue well above estimates.
Apple Inc, Amazon.com Inc, Alphabet Inc and Facebook Inc will report their earnings later on Thursday, and some on Wall Street will question their valuations after this year’s earnings.
The companies’ shares, which have a combined market value of around $ 5 trillion, erased the early losses to increase between 0.2% and 0.5%.
“The technology gains will be delivered at least as expected. It is the part of the market that is effectively making everything okay, because it is a large enough percentage of the major indices,” Toews added.
Economically sensitive sectors: Finance, energy and materials fell the most among the main S&P sectors.
At 1:08 pm ET, the Dow Jones Industrial Average fell 208.72 points, or 0.79%, to 26,330.85, the S&P 500 fell 12.43 points, or 0.38%, to 3,246.01. The Nasdaq Composite rose 35.44 points, or 0.34%, to 10,578.38.
The United States Federal Reserve acknowledged on Wednesday that the increase in cases likely delayed the recovery, while pledging to support the economy for as long as needed, giving a boost to the three main Wall Street indexes at the end of the session.
The following quarterly results were obtained by United Parcel Service Inc and Procter & Gamble Co on Thursday, with Johnson & Johnson a little higher when human safety trials for their COVID-19 vaccine began.
Corporate earnings have tended to be better than expectations so far, but the magnitude of the economic damage from the pandemic and the likelihood that it will linger weigh in investors’ minds.
Senior Trump administration officials on Thursday planned more talks with Republicans and Democrats in Congress, despite hopes of reaching an agreement to extend coronavirus aid before the Friday deadline.
The decrease in emissions outstripped those of the overtakers for a ratio of 2.17 to 1 on the NYSE and a ratio of 1.42 to 1 on the Nasdaq.
The S&P index recorded 26 new 52-week highs and no new lows, while the Nasdaq recorded 69 new highs and 26 new lows. (Report by Medha Singh and Devik Jain in Bangalore; Patrick Graham and Shounak Dasgupta edition)
