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.
A lockout is now in place for Major League Baseball. The collective bargaining agreement between the league and players association expired at 11:59 p.m. Wednesday night.
MLB commissioner Rob Manfred said both sides were unable to negotiate a new contract by that time, so the league locked out the players on Thursday at 12:01 a.m. The lockout also means trades and free agency deals have to stop for now. Dodgers Nation lead editor Clint Pasillas joined Cheddar News' Closing Bell to discuss.
The UK-based augmented reality startup, Dent Reality, raised the equivalent of $3.4 million USD in its most recent funding round. Dent Reality has created an AR app for smartphones that helps shoppers navigate retail locations by providing a layout of a store's aisles, while showing where to find specific items. The company works mainly with grocery stores but aims to integrate its tech with all types of physical spaces. Dent Reality CEO Andrew Hart joins Cheddar News' Closing Bell to discuss.
As the electric vehicle sector continues to heat up, one company could be poised to knock Tesla from its top spot. Many analysts have issued buy ratings and raised their price targets for EV-maker Rivian, and say that the company's push into under-developed areas like electric SUVs, pickups, and delivery trucks could give it the right competitive edge to push Tesla from the number one spot. Dan Ives, Managing Director of Equity Research at Wedbush Securities, joins Cheddar News' Closing Bell to discuss Rivian's potential market domination, why their business plan sets them up for success, and more.
Cheddar's Chloe Aiello joined "Closing Bell" to break down the progress of the SAFE Banking Act in Congress as cannabis businesses operators struggle to find financial institutions that will service them. Banks face steep federal penalties, including the risk of losing a bank charter, if found to be servicing marijuana businesses even if their state has legalized operations. Aiello reported that while there was some bipartisan support for the measure in the Senate, the bill faces some opposition from conservatives with "longstanding concerns" about cannabis and progressives who prefer a more comprehensive approach to reform.
Not everything is as it seems in the supermarket. From name brands under different labels, to confusing store layouts, supermarkets employ a variety of tactics to keep you spending. Including selling products with surprising ingredients. This episode of Who Knew? unveils the secrets of our supermarkets.
The world is amidst a skyscraper boom. In 2018, 146 buildings over 650 feet were constructed. That’s more than the total amount of skyscrapers constructed between 1979 and 1999. And all this construction is transforming our cities.
Amazon and online shopping have forever changed how we shop. While I love that I can order almost anything I need with the click of the mouse, this transition from in- person retail is shuttering MUCH of the brick and mortar landscape. But in what’s been deemed the “retail apocalypse” some brick and mortar stores are actually thriving.
From talking animals, to celebrity endorsements, to commercials that pull at your heart strings, agencies are always looking for new ways to connect with you. So it’s no surprise that trends come and go. But what might surprise you is how quickly trends change. In fact, most changes can be pinpointed to a single moment.
Over the decades American pastimes have come and gone. From the soda fountain, to carhop diners, to roller rinks. These former staples of American life have slowly faded into the void. And today, it looks like the time has come for a few other beloved businesses.
The streaming wars could be peaking as platforms vie for a shrinking pool of new subscribers and services like Disney+ recalibrate their outlooks as the rate of new memberships slows. Jana Arbanas, the U.S. telecom, media, and technology sector leader at Deloitte, joined Cheddar to discuss the 2022 outlook for streaming platforms, expecting more than 150 million people to cancel subscriptions adding to the global churn trend. "People are signing up for a service for a very specific piece of original, compelling content, watching that, perhaps, season of content, dropping that service, and then re-upping the service again when the next season comes out," Arbanas noted.
