Trader Robert Charmak works on the floor of the New York Stock Exchange, Monday, July 12, 2021. (AP Photo/Richard Drew)
By Damian J. Troise and Alex Veiga
Major US stock indexes closed mostly lower Thursday, pulling back further from the record highs they reached at the start of the week.
The S&P 500 fell 0.3% after shedding an early gain. The benchmark index is now on pace for its first weekly loss in four weeks.
Technology and communications stocks, and companies that rely on consumer spending, accounted for much of the pullback, outweighing gains elsewhere in the market. Energy stocks fell following a broad slide in energy prices. Among the winners were financial stocks, including banks, which have been reporting mostly solid earnings.
Bond yields fell. The yield on the 10-year Treasury note slipped to 1.30% from 1.35% the day before.
Investors continued to focus on where the economy is headed as the pandemic wanes and on what companies have to say about how higher inflation is affecting their business.
“As long as inflation ends up being transitory, as the Fed believes, the economy is set to continue to do real well,” said Chris Gaffney, president of TIAA Bank World Markets. "The big risk is that inflation spikes and stays here.”
The S&P 500 fell 14.27 points to 4,360.03. The tech-heavy Nasdaq slid 101.82 points, or 0.7%, to 14,543.13. The Dow Jones Industrial Average bucked the trend and bounced back after being down much of the day. The blue-chip index gained 53.79 points, or 0.2%, to 34,987.02.
Small company stocks also fell. The Russell 2000 index lost 12.07 points, or 0.6%, to 2,190.29.
On Thursday, Federal Reserve Chair Jerome Powell delivered his second day of testimony before Congress. Powell reiterated that signs of inflation should ease or reverse over time, while acknowledging that the U.S. is in the midst of an unparalleled economic reopening on the heels of a pandemic-induced recession.
The government said Wednesday that inflation at the wholesale level jumped 1% in June, pushing price gains over the past 12 months up by a record 7.3%. That followed a report a day earlier showing consumer prices posted the biggest 12-month gain in 13 years.
Investors are also trying to determine how the economic recovery will play out for the rest of the year as the world tries to get back to normal with COVID-19 waning, but still lingering.
“There’s a big question mark around COVID-19 shifting from an acute to a chronic condition for the global market,” said Rod von Lipsey, managing director at UBS Private Wealth Management.
While the virus and its variants aren’t likely to severely disrupt the economic recovery, expectations for a quick snapback have been stymied by persistent mutations, he said.
New data on applications for unemployment benefits signaled the labor market continues to improve. The Labor Department said Thursday that unemployment claims fell by 26,000 last week to 360,000, the lowest level since the pandemic struck last year.
More companies released their latest quarterly earnings Thursday. Progressive fell 2.6% after the insurance company’s results fell far short of analysts’ forecasts. Morgan Stanley rose 0.2% after reporting a 10% rise in quarterly profits from a year earlier.
A larger bulk of companies will start reporting next week, when earnings season gets into full swing.
American International Group, better known as AIG, rose 3.6% after the insurance company reached a deal with Blackstone Group to help manage some of its life insurance assets.
Several Silicon Valley insiders are being accused of contorting a 1990s-era tax break to avoid taxes on millions of dollars of investment profits. The tax break is known as the qualified small business stock exemption, and it allows early investors in certain companies to avoid half of the taxes on up to $10 million in capital gains. A piece recently published in the New York Times says venture capital firms like Andreessen Horowitz replicated the tax exemption by giving shares of companies to friends and family, who would otherwise face a 23.8% capital gains bill. The CEO of Roblox is also accused of replicating the tax break for his family members at least 12 times. Although the loophole known as 'stacking' is considered to be legal, the Times piece implies that the exemption has been manipulated for the ultra-wealthy to become more wealthy. Greycroft co-founder and Chairman Emeritus Alan Patricof joins Cheddar News' Closing Bell to discuss.
There is a new player in the mobile app stock trading space.
Zingeroo recently announced a funding round of $8.5 million. The company says it aims to bring 'friendly competition' to stock trading, by literally breaking trading down into daily and weekly competitions between friends. Zingeroo also says it hopes its new approach can make trading more accessible, educational, and social than ever before. Zingeroo co-founder and CEO Zoe Barry joins Cheddar News' Closing Bell for more.
Stocks closed higher on the first trading day of 2022, with both the Dow and the S&P 500 hitting record closes. Apple and Tesla created momentum, with the tech giant hitting a $3 trillion market cap, and the EV maker reporting over 300,000 deliveries in the fourth quarter of 2021. Investors are taking an optimistic approach to start the year even as COVID-19 continues to linger and omicron cases soar. Rebecca Walser, President at Walser Wealth Management, joins Cheddar News' Closing Bell to discuss today's market movement, her broad predictions for the year, and more.
As cell carriers AT&T and Verizon planned to roll out nationwide 5G service this week, the FAA and U.S. DOT are asking the companies to pause their plans so more research can be done on the impact 5G has on aircraft technology. The companies are refusing, citing French regulations that limit wireless signals around airports while allowing research to continue. This week's launch wasn't the first time concerns have delayed 5G — last year, Airbus and Boeing express concerns, pushing the deadline into November, December, and then into this year. So what happens now — and what happens next? Will 5G roll out this year as expected? Jon Swartz, Senior Reporter at MarketWatch, joins Cheddar News' Closing Bell to discuss the state of the planned 5G rollout, why the FAA and U.S. Department of Transportation are asking carriers to stall the launch, and more.
Tyrone Ross, CEO of Onramp Invest, joins Cheddar News' Closing Bell, where he explains why he believes the current crypto slump is expected to persist and says that investors should be focusing more on Bitcoin's hashrate when it comes to metrics.
As the COVID-19 omicron variant continues to spread, thousands of flights have been canceled, restaurants and bars have been forced to re-adapt to outdoor and take-out dining, and consumers are canceling their travel and other plans. This all comes as the CDC recently updated its quarantine guidelines for people who test positive, slashing the isolation period from 10 days to five. That change was pushed by the airline industry as it continues to struggle with labor shortages. How will the variant continue to impact businesses large and small? Laura Reathaford, Partner at Lathrop GPM, and Tom Sacco, CEO, President, and Chief Happiness Officer of Iowa-based Happy Joe's Pizza and Ice Cream, join Cheddar News' Closing Bell to discuss employment law issues related to worker safety during COVID-19 outbreaks, and how small businesses are dealing with the latest wave, respectively.
