NEW YORK: The Dow and the S&P 500 slipped in choppy trading on Thursday as a jump in bonds yields, downbeat corporate earnings and a slew of economic data pointing to stubborn inflation kept investors on edge.
Market participants have been keeping a close watch on data as they fear the Federal Reserve may stick to its rate-hike path if it fails to bring inflation within its targeted range.
A report on Thursday showed the number of Americans filing new claims for unemployment benefits rose slightly last week, while layoffs dropped to an 11-month low in July as labor market conditions remain tight.
Another report showed the US services sector slowed in July, but businesses faced higher prices for inputs as demand continued to hold up, suggesting a long and slow road to low inflation.
The yield on the 10-year benchmark note rose to 4.169% after the data to a nine-month high, extending its climb from a day earlier when Fitch’s downgrade of top-tier US credit rating and strong private employment data supported its upward move.
All eyes are now on July’s employment report, which is scheduled to be released on Friday.
“What financial markets have been anticipating is that the Fed has completed its rate hike campaign,” said Quincy Krosby, chief global strategist at LPL Financial.
“With the underlying strength in the economy coupled with prices inching higher, the pullback in the market may need to see yields on the 10-year Treasury ease in order to restore momentum.”
Richmond Federal Reserve President Thomas Barkin said on Thursday US inflation remained too high, although recent readings indicated an easing of price pressures.
At 11:33 a.m. ET, the Dow Jones Industrial Average was down 46.72 points, or 0.13%, at 35,235.80, the S&P 500 was down 8.34 points, or 0.18%, at 4,505.05, and the Nasdaq Composite was up 6.53 points, or 0.05%, at 13,979.98.
The Cboe Volatility Index, Wall Street’s fear gauge, briefly hit a two-month high and was last up at 16.33.
Earnings are also in focus, with Apple and Amazon.com due to report quarterly results after market close.
The iPhone maker slipped 0.3%, while the e-commerce giant added 0.6%, respectively.
Second-quarter earnings are now expected to fall 5% from a year earlier, according to Refinitiv data.
Qualcomm tumbled 10.2% after a gloomy forecast signaled more pain for the biggest maker of smartphone chips from the ongoing slump in the consumer electronics market.
PayPal Holdings shed 10.7% as investors were disappointed by the payments firm’s quarterly operating margin, even as executives said they expect improvement towards the end of the year.
US travel stocks fell on downbeat quarterly reports from Spirit Airlines and Expedia that amplified concerns domestic demand may be easing after a strong rebound from pandemic lows.
Meanwhile, Moderna gained 1.1% as the company raised its annual forecast for COVID-19 vaccine sales to up to $8 billion.
Declining issues outnumbered advancers for a 2.08-to-1 ratio on the NYSE and a 1.28-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and four new lows, while the Nasdaq recorded 37 new highs and 63 new lows.
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