NEW YORK CITY, RAW – The S&P 500 has ended lower after weekly jobless claims fell to a near 18-month low, allaying fears of a slowing economic recovery, but also stoking worries the Fed could move sooner than expected to scale back its accommodative policies.
The Labor Department said initial claims for state unemployment benefits dropped 35,000 to a seasonally adjusted 310,000 for the week ended September 4, the lowest level since mid-March 2020. That suggested that job growth could be hindered by labour shortages rather than cooling demand for workers.
Microsoft, Apple and Amazon each declined on Thursday, all three among the stocks weighing most on the S&P 500 and Nasdaq.
The S&P 500 real estate and healthcare indexes were among the poorest performers of 11 sectors, while financials and materials made modest gains.
JPMorgan, Wells Fargo, Citi Group and Morgan Stanley each rose, tracking a slight rise in benchmark bond yields following the claims data.
“The problem with the market these days is it’s rotating more than it’s moving. Today, because of the jobs claims report, everyone is buying cyclical stocks,” said Jay Hatfield, chief executive of Infrastructure Capital Management in New York. “We see it as a range-bound market, between 4,400 and 4,600 (on the S&P 500).”
Investors have become more worried in recent sessions after a recent monthly jobs report showed a slowdown in US hiring, suggesting the economic recovery may be losing steam faster than expected. Also dragging on sentiment has been uncertainty about when the US Federal Reserve’s will scale back massive measures enacted last year to shield the economy from the coronavirus pandemic.
The Dow Jones Industrial Average fell 147.25 points, or 0.42 per cent, to 34,883.82, the S&P 500 lost 20.44 points, or 0.45 per cent, to 4,493.63 and the Nasdaq Composite dropped 38.17 points, or 0.25 per cent, to 15,248.46.
Lululemon Athletica soared after providing a strong annual forecast, as demand for its yoga pants remains strong despite the easing of coronavirus restrictions.
Reports that Beijing slowed down approval for all new online video games sent shares of US-listed gaming stocks Activision Blizzard Inc, Electronic Art Inc, and Take-Two Interactive Software Inc down more than one per cent.
Digital Realty slid after the data centre REIT announced a public offering of 6.25 million shares.