Sources dropped on Thursday as Wall Street digested a strong rally this week along with the latest weekly jobless requisitions data and rising tensions between China and the U.S.
The Dow Jones Industrial Average closed 101.78 points lower, or 0.4%, at 24,474.12. The S&P 500 flatten 0.8% to 2,948.51 while the Nasdaq Composite was down nearly 1% to 9,284.88.
Amazon shares slid 2.1% after experiencing a record high earlier in the session. Netflix closed 2.6% lower while Alphabet and Apple dipped 0.2% and 0.8%, individually.
“The economic data today … still demonstrates the labor market continues to suffer in the near term,” averred Michael Arone, chief investment strategist at State Street Global Advisors. “You combine that with climb U.S.-China tensions and what’s been a pretty good week, and that’s your recipe for this market languishing today.”
Jobless calls up 2.4 million
The Labor Department reported Thursday another 2.4 million people filed for unemployment service perquisites last week. Thursday’s report brings the total number of filings during the pandemic to more than 38 million. The count of continuing claims was at 25.07 million, its highest level on record.
To be sure, the latest figures show the pace of new filings has declined from prior weeks.
“Although the number of new jobless claims continues to ease … the sharp rise in continuing claims the week prior to illustrates that the easing of lockdowns in many states has not yet resulted in any large-scale recall to work for those currently on momentary layoff,” said Paul Ashworth, chief U.S. economist at Capital Economics, in a note. “There is little evidence that the reopening of the saving has, as yet, led to any sudden snap back in employment.”
Rising tensions between China and the U.S. tempered market sentiment on Thursday. On Wednesday, the Senate outmoded a bill that could ban Chinese companies such as Alibaba and Baidu from listing on U.S. exchanges.
That out was passed after President Donald Trump said in a tweet that the “incompetence of China” caused “this lump Worldwide killing,” referring to the coronavirus. Shares of Alibaba dropped 2.1%. JD.com fell by 3.2%.
Despite Thursday’s decline, the vital averages were all up at least 2.96% for the week thanks in large part to state efforts to ease stay-at-home orders and in lifting restrictions on business. Connecticut, for example, began on Wednesday to allow residents to dine in at restaurants with out of doors seating.
Sentiment has also been lifted by rising optimism around a potential coronavirus vaccine. Moderna intended Monday that an early stage vaccine trial had shown positive results, with all 45 participants expose Covid-19 antibodies.
“The broad market has taken some support from positive treatment and vaccine headlines as a allowance to a generally more optimistic economic reopening,” LPL Research wrote Wednesday.
LPL Market Strategist Ryan Detrick did wariness, however, that such a comeback is usually accompanied by occasional pullbacks — sometimes as steep as 10% — as investors try to admonish sentiment and prices to an appropriate level given bear-market headwinds.
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