MARKET SNAPSHOT: U.S. Stocks: Dow Drops By Triple Digits

By Anora Mahmudova and Carla Mozee, MarketWatch

Employment cost index rises more than expected

NEW YORK (MarketWatch) -- The Dow Jones Industrial Average opened with a triple-digit decline Thursday, as investors weighed the implications of robust economic growth and signs of rising wage inflation on Federal Reserve policy.

The main benchmarks were on track to finish the volatile month mostly flat.

The S&P 500 (SPX) opened 14 points, or 0.7%, lower at 1,956.19. The Dow Jones Industrial Average (DJI) dropped 123 points, or 0.7%, to 16,757.06. The Nasdaq Composite (RIXF) lost 34 points, or 0.8%, to 4,429.36.

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Weekly jobless claims rose slightly less than expected a week after hitting a 14-year low. However the employment cost index rose due to a larger-than-expected increase in wages. Many analysts watch for wage inflation as a precursor to inflation.

Investors will continue to focus on company earnings. Also in the spotlight is Argentina. Standard & Poor's Ratings Services declaring the country in selective default after talks aimed at a settlement between Argentina and holdout creditors fell apart late Wednesday.

"The markets seem to be digesting a lot of the data from [Wednesday] along with the Fed statement. Even though there is a good chance we'll see a revision to what was a surprisingly good Q2 GDP number, this does raise the specter of monetary tightening in less than a year," said Brenda Kelly, chief market strategist at IG, in emailed comments.

International concerns

Concerns about the health of Europe's banking sector was a drag on Wall Street, as shares of Banco Espírito Santo SA in Lisbon sank as much as 50% after the Portuguese lender reported a record second-quarter loss.

A reading on July business conditions in the Chicago area is due at 9:45 a.m. Eastern Time, and economists are looking for the Chicago PMI to rise to 63.5, from 62.6 in June.

Corporate news

Among individual stocks, Time Warner Cable Inc.'s (TWC) second-quarter results surpassed Wall Street's estimates.

Exxon Mobil (XOM) profit climbed 28% and beat estimates. Shares fell 1.4% however.

Avon (AVP) said second-quarter profit fell on lackluster sales, particularly in Latin America and North America.

After the bell, Tesla Motors (TSLA) will release quarterly results.

Shares in Synchrony Financial begins trading Thursday after the giant initial public offering was priced at $23, the low end of expectations. (Read more about the day's notable movers here: http://www.marketwatch.com/story/whole-foods-gopro-and-tesla-are-stocks-to-watch-thursday-2014-07-31.)

In the commodities market, crude-oil futures (CLU4) fell below $100 a barrel on bearish U.S. inventory data, while gold futures (GCQ4) turned lower.

European stocks fell, and Asian equities closed mixed, with Japan's Nikkei Average ending down by 0.2%.

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