By Anna Hirtenstein and Paul Vigna
U.S. stocks slipped Thursday after data showed fewer Americans
applied for jobless benefits, potentially signaling that the pace
of recovery in the labor market is starting to pick up.
The S&P 500 dropped 0.2% as of the 4 p.m. ET close of
trading, still remaining close to its first record since the
coronavirus pandemic disrupted the economy. The index had risen in
eight of the past nine sessions through Wednesday, when it eclipsed
its closing record in intraday trading but pulled back before the
"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
It has been only 123 trading days since the S&P 500 set its
last closing record on Feb. 19. A new high would be the fastest
recovery from a bear market on record. Moreover, in the 100 trading
days since the March 23 lows, the index is up 51%. That is the best
100-day spurt since 1933.
The Dow Jones Industrial Average dropped 0.3%, or 80 points,
while the tech-heavy Nasdaq Composite Index rose 0.3%. Overseas,
the pan-continental Stoxx Europe 600 fell 0.6%.
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, in
contrast to the temporary layoffs and furloughs at the onset of the
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."
The measures announced over the weekend by President Trump were
short of what the economy needs, she said.
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.
Federal Reserve officials on Wednesday once again urged the
government to press ahead with additional spending to bolster the
economy. San Francisco Fed President Mary Daly said additional
relief to state and local governments would be important to prevent
deeper cutbacks in services and layoffs of public workers.
The economy may take a bigger hit because of the difficulty some
states are encountering in controlling the outbreak, and that may
require more government spending, Boston Fed President Eric
Rosengren said. 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 networking-equipment company
Cisco Systems tumbled 11%, its worst one-day drop in years, after
it gave earnings guidance for the current quarter that was below
analysts' predictions. Its chief financial officer, Kelly Kramer,
stepped down, too.
Yet the rest of the tech sector was still driving higher. Apple,
Facebook, Alphabet and Amazon all climbed. Tech is expected to
benefit from economic changes forced by the pandemic. The S&P
500's tech sector is up 24% this year, the top performing of the 11
Yields on 10-year Treasury notes ticked up to 0.716% on Thursday
from 0.669% after weak demand in a $26 billion auction of 30-year
bonds. Wednesday saw bond investors absorb a $38 billion auction of
new 10-year notes in a week that saw the U.S. raise $112
In commodities, gold rose 1.1% to $1,9656.70 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.
He sold down part of his portfolio's gold holdings two days ago to
U.S. crude-oil prices fell 0.9% to $42.27. 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.
In Asia, 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. The Shanghai
Composite Index and Hong Kong's Hang Seng Index were both
Write to Anna Hirtenstein at firstname.lastname@example.org and Paul
Vigna at email@example.com
(END) Dow Jones Newswires
August 13, 2020 16:17 ET (20:17 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.