By Joe Wallace 

U.S. stocks wobbled Thursday as investors parsed earnings reports and jobless claims data showing the economic recovery gained momentum in recent weeks.

The S&P 500 hovered around the flat line at the open. The Dow Jones Industrial Average ticked 0.2% higher a day after the blue-chip index closed at a record for the 22nd time this year. The Nasdaq Composite slid 0.3%.

Major U.S. indexes stand at or close to all-time highs, bolstered by a surge of economic growth and corporate earnings as restrictions on some activities are relaxed. Some investors say the speed of the U.S. recovery, which stands in contrast to some other regions where Covid-19 vaccines aren't as widespread, will keep stocks on an upward trajectory.

"We should see cash flows and company cash flows really improve, especially with the reopenings happening," said Mary Nicola, a fund manager at PineBridge Investments. Although valuations are high, stocks remain attractive compared with low-yielding bonds, she added.

The Labor Department said jobless claims dipped below 500,000 last week for the first time during the Covid-19 pandemic as layoffs declined and hiring accelerated. Initial claims for unemployment benefits, a proxy for layoffs, fell to 498,000 from 590,000 a week before.

Shares of pharmaceutical companies fell ahead of the opening bell after the U.S. said it would support the temporary waiver of intellectual property provisions to allow developing nations to produce Covid-19 vaccines. Novavax dropped 7.4%, while Pfizer fell over 2% and Moderna slid more than 7%. Moderna said it turned a profit for the first time in the first quarter, aided by its vaccine.

In other moves, shares of Etsy dropped over 10% after the online crafts marketplace projected a decline in revenue in the second quarter. PayPal bumped up its revenue guidance for the year, giving its stock a more than 4% boost in premarket trading.

News Corp., The Wall Street Journal's parent company, and Beyond Meat are scheduled to report earnings after markets close.

Companies have blown past forecasts so far this earnings season. Of the 381 companies on the S&P 500 that had reported through Wednesday, 84% had topped analysts' expectations, according to FactSet.

Yet many companies beating forecasts have seen a lackluster response in their share price. Some investors say that is a sign, alongside recent volatility in tech stocks, that the rally that began last March is beginning to flag.

"Although the S&P is just 1% off its high, I think equity markets are beginning to look very fatigued," said Paul O'Connor, head of multiasset investments at Janus Henderson.

Indicators including surveys by the American Association of Individual Investors suggest investors are almost uniformly bullish, a setup that tends to precede a pullback in stocks, according to Mr. O'Connor. "There are such high expectations embedded in markets that we're going to need a steady stream of good news just to maintain the current prices," he said.

In the bond market, the yield on 10-year Treasury notes slipped to 1.583% from 1.584% Wednesday. Yields, which move in the opposite direction to bond prices, have fallen for four consecutive days.

Overseas, the Stoxx Europe 600 slipped 0.3%, weighed down by shares of oil, gas, travel-and-leisure and technology companies.

Société Générale was among the best-performing stocks in the region, gaining more than 4% after the French bank reported the best quarter for its markets business in years.

The British pound edged down to $1.3903 after the Bank of England raised its 2021 growth forecasts for the U.K. economy. The central bank left its key interest rate unchanged and gave no indication that it was planning to change monetary policy soon.

Copper prices continued to advance, climbing 1% to just under $10,030 a metric ton on the London Metal Exchange. Rising commodity prices have bolstered expectations for a pickup in inflation.

In Asia, Japan's Nikkei 225 rose 1.8% by the close and China's Shanghai Composite slipped 0.2%.

Shares of Shanghai Fosun Pharmaceutical and other Asia-based pharmaceutical companies tumbled after the U.S. said it would support a temporary waiver of intellectual property rights of Covid-19 vaccine makers. Hong Kong-listed shares of Shanghai Fosun closed 14% lower.

--Ronnie Harui contributed to this article.

Write to Joe Wallace at Joe.Wallace@wsj.com

 

(END) Dow Jones Newswires

May 06, 2021 09:49 ET (13:49 GMT)

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