By Anna Hirtenstein and Paul Vigna
U.S. stocks slipped Thursday, pulling back after an August
rally, despite data showing fewer Americans applied for jobless
benefits in the latest week.
The Dow Jones Industrial Average and S&P 500 have climbed in
eight of the past 10 trading sessions on signs of slowing
coronavirus infections and a pickup in economic activity.
The S&P 500 has flirted with record levels in recent days
but ended Thursday's session down 6.92 points, or 0.2%, at 3373.43,
still within 0.4% of its Feb. 19 record. The index wobbled between
gains and losses for much of the day after briefly eclipsing its
closing record in intraday trading Wednesday.
It has been only 123 trading days since the S&P 500 set its
last high. A new record would be the fastest recovery from a bear
market in history. Moreover, in the 100 trading days since the
March 23 low, the index is up 51%--its best 100-day spurt since
"I could say I'm not surprised, and give you all the reasons why
it happened, but I think everybody is surprised by it and how
quickly it happened," Shawn Snyder, head of investment strategy at
Citi Personal Wealth Management, said of the approaching record on
The Dow Jones Industrial Average dropped 80.12 points, or 0.3%,
to 27896.72, while the tech-heavy Nasdaq Composite index rose 30.27
points, or 0.3%, to 11042.50.
Investors appeared to be caught between conflicting developments
on the economy.
Initial jobless claims fell to 963,000 in the week ended Aug. 7,
ending a 20-week streak of results above 1 million. However, it is
also more likely that the layoffs occurring now are permanent,
analysts warned, in contrast to the temporary layoffs and furloughs
at the onset of the pandemic.
Having weekly claims under 1 million is encouraging, said Lydia
Boussour, senior economist at Oxford Economics, "but it's still a
painfully high number. We still have a labor market that is very
impacted by this crisis."
Investors are concerned that the expiration last month of the
extra $600 in weekly unemployment benefits is likely to leave less
money in workers' pockets and dent consumer spending, becoming a
drag on the economy.
"The economy needs another fiscal booster," Ms. Boussour said.
"If it doesn't get it, we run the risk of activity stalling and the
labor market losing steam again."
A standoff between lawmakers on a fresh stimulus package showed
no signs of easing Thursday, and negotiations may be stalled until
next month. House Speaker Nancy Pelosi said the two sides remain
"miles apart," and the Democrats would only resume talks if
Republicans agree to spend significantly more than $1 trillion.
The U.S. reported nearly 56,000 new coronavirus cases, the
highest daily tally in four days. While the data suggests only
about one-fifth of states are registering an increase in cases,
some are logging declines in testing.
Among individual stocks, shares of Cisco Systems tumbled $5.38,
or 11%, to $42.72, their worst one-day drop since 2011, after the
networking-equipment company gave earnings guidance for the current
quarter that was below analysts' predictions. Its chief financial
officer, Kelly Kramer, stepped down, too.
The yield on the 10-year U.S. Treasury note ticked up for the
fifth straight session, to 0.714% Thursday from 0.669% a day
earlier amid weak demand in a $26 billion auction of 30-year
In commodities, gold rose 1.1% to $1,956.70 a troy ounce as the
volatility seen in recent days continued. This week's stint of
choppy trading paused a monthslong rally that took the precious
metal to an unprecedented high.
"We keep gold because there are still uncertainties, real rates
are low, inflation may be higher than expected," said Luc Filip,
head of private banking investments at SYZ Private Banking. But the
short-term potential for a rally in gold has now reduced, he said,
adding he pared the holdings in his portfolio two days ago to book
U.S. crude-oil prices fell 1% to $42.24 a barrel. The
International Energy Agency on Thursday projected a deeper rout in
oil demand for 2020 than previously forecast because of the high
coronavirus case numbers in several major economies.
Overseas, Japan's Nikkei 225 rose 1.8% after the central bank's
producer-price index, which measures manufacturing costs and
inflation, came in above expectations for July.
Write to Anna Hirtenstein at firstname.lastname@example.org and Paul
Vigna at email@example.com
(END) Dow Jones Newswires
August 13, 2020 17:11 ET (21:11 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.