Stock Market Today: Stocks Step Back Amid Economic Gloom

The market gave up its early momentum to finish lower after a disappointing business report and the ongoing impasse in D.C.

(Image credit: Getty Images)

Stocks tumbled Wednesday, weighed down by some downbeat economic data and the stalemate in Congress over additional fiscal stimulus. On the economics front, a report from IHS Markit showed the recovery in U.S. business activity slowed last month, raising fears that the economy is decelerating as it approaches the end of the third quarter. Meanwhile, the impasse in D.C. over a second round of financial help for businesses and the unemployed continued to hurt investor sentiment. The blue-chip Dow Jones Industrial Average finished the session down 1.9%, or 525 points, at 26,763.

Although stocks gave up early gains on Wednesday morning following disappointing business activity data, strategists noted that the landscape wasn't totally bereft of good news. "On the positive side, Nike posted strong fiscal first-quarter earnings, driven by more than 80% growth in digital sales," writes Argus Research. "Johnson & Johnson also announced the start of a Phase 3 trial of its single-dose coronavirus vaccine candidate."

Other action in the stock market today:

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  • The Nasdaq Composite lost 3%.
  • The S&P 500 fell 2.4%
  • The small-cap Russell 2000 declined 2.9%.
  • Tesla's (TSLA (opens in new tab)) long-awaited "Battery Day" landed with a thud. The electric vehicle company touted a cheaper, more efficient battery that would lower car prices, but ultimately the Street responded by selling the news. "Tesla’s battery day was long on vision and boldness, but short on specifics and near term deliverables," wrote Bernstein Research. Shares in TSLA (opens in new tab) dropped 10.3% to $380.36.

Don't Overlook Growth Stocks with a Value Component

It's no secret that growth stocks have outperformed value stocks over the past decade, and they aren't expected to cool off anytime soon. They sure have proven their worth in 2020. Some long-term investors may be put off by the tendency of growth stocks to have pricier valuations and greater volatility, but there's actually no shortage of growth names that have a value component as well. Check out the stocks most favored by the nation's hedge funds, and you'll see plenty of "growth" names that have rock-solid balance sheets, defensible franchises and even steady dividends. Or have a look at the normally poky telecommunications sector, which can claim ownership of some stocks poised for outsized growth thanks to the build-out of 5G mobile networks. And it shouldn't go unnoticed that Warren Buffett -- an investor who hardly takes untoward risk and loves dividends -- has bought a slew of growth stocks for Berkshire Hathaway's portfolio. Indeed, notwithstanding his recent backing of a blockbuster tech IPO, many of Buffett's favorite growth stocks offer investors a comfortable combination of outperformance, income and safety.

Dan Burrows
Senior Investing Writer,

Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.