US stocks snap 2-day rally as tech giants slide and jobless claims disappoint
- US stocks declined on Thursday for the first time in three days after weekly jobless-claims data came in higher than economists anticipated.
- Filings for unemployment benefits totaled 1.3 million in the week that ended on Saturday, landing above the 1.25 million estimate and falling just 10,000 from the previous reading.
- Tech giants led indexes' downturn as investors weighed risks heading into earnings season.
- Oil futures dropped, with West Texas Intermediate crude falling as much as 1.7%, to $40.52 per barrel.
- Watch major indexes update live here.
US stocks declined on Thursday for the first time in three days after weekly jobless-claims data came in higher than expected.
Tech giants led the decline. Twitter sank following Wednesday's scandal in which hackers gained access to several high-profile Twitter accounts — including those of former President Barack Obama, Apple, Elon Musk, and Kim Kardashian West — and called on followers to send bitcoin.
"Tough day for us at Twitter. We all feel terrible this happened," CEO Jack Dorsey tweeted on Wednesday night.
Here's where US indexes stood at the 4 p.m. ET market close on Thursday:
- S&P 500: 3,215.57, down 0.3%
- Dow Jones industrial average: 26,734.71, down 0.5% (135 points)
- Nasdaq composite: 10,473.83, down 0.7%
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Filings for unemployment benefits hit 1.3 million in the week that ended on Saturday, the Labor Department announced on Thursday. That was down just 10,000 from the previous week's reading. Economists surveyed by Bloomberg had expected claims to fall to 1.25 million for the week.
While claims have declined for 15 weeks in a row, Thursday's reading was still roughly double the 665,000 filings during the worst week of the Great Recession. Since the coronavirus pandemic slammed the US economy, more than 51 million Americans have filed for unemployment benefits.
Data detailing consumer spending trends pointed to a rosier economic recovery. Retail sales jumped by 7.5% in June, beating economists' estimate of a 5% increase, Reuters reported. The uptick followed a record-breaking 18.2% surge in May as economic reopenings fueled a bounce-back in spending activity. Still, investors largely looked through the sales data to focus on the still dire job-market damage.
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"Disappointing near-real-time claims are more important than the good retail sales data," said Ian Shepherdson, the chief economist at Pantheon Macroeconomics. "A flat trend in initial claims — which will in due course stop the downward trend in continuing claims - probably is about the best we can hope for."
Bank of America shares fell after the company reported better-than-expected earnings in the second quarter. The firm set aside $4 billion for loan loss reserves over the period, signaling continued credit-market risk among Wall Street's major banks.
Morgan Stanley trounced analysts' estimates as strong trading-desk performances drove a record quarterly profit. CEO James Gorman said that the bank was sitting on $6 billion to $10 billion in "excess capital" and that Morgan Stanley hopes to use the funds to boost dividends and resume buybacks as early as 2021.
Dell stood out from the tech-sector slide, rising as much as 17% after confirming that it might spin off its stake in the software company VMware. Bank of America raised its price target on Dell shares to $70 from $60, adding that such a transaction "could help unlock the value of core-Dell" and allow VMware to pursue faster growth.
The market slump followed a moderate uptick across indexes on Wednesday on the back of positive news about a coronavirus vaccine. The biotech firm Moderna announced that all 45 participants in a phase-one trial of its vaccine candidate developed immune-system responses.
Indexes also turned higher after Goldman Sachs easily surpassed second-quarter estimates and posted its second-best quarterly revenue of all time.
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