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.
Frank Lee, Managing Director at Miracle Mile Advisors, joins Cheddar News' Closing Bell, where he explains why markets are soaring after the Dow, S&P, Nasdaq, and the Russell 2000 all reached new record closes to begin the trading week.
Amid an ongoing labor shortage, more companies are turning to automation for processes like shipping and delivery in order to relieve supply chain pressures. But what does this mean for the wider labor market - will those jobs return? How will workers fare once supply chain issues ease? Sam Lurye, CEO and Founder of automation startup Kargo, joins Cheddar News' Closing Bell to discuss the pros and cons of automation, how workers can adapt alongside new technology, and how the pandemic led to the perfect storm for the rise of automation.
Ben McMillan, CIO at IDX Digital Assets, joins Cheddar News' Closing Bell, where he explains how the recent surge by Ethereum and Bitcoin can be connected to a play against inflation.
AI chipmaker Hailo raised $136 million in its latest funds round, representing one of the largest investments ever in the AI chip space. It comes amid the ongoing global chip shortage, and a surge in demand for the company's technology, which is used to power smart cities, cars and homes, and the next generation of retail. Hailo co-founder and CEO Orr Danon joined Cheddar News' Closing Bell to discuss.
The two biggest names in the ride-sharing industry reported earnings this week. Uber and Lyft both beat Wall Street expectations on their top and bottom lines, as the companies and the ride-sharing industry have recently faced several challenges like the pandemic, the supply chain crisis, and driver shortages. Johnson Research Group CEO Chris Johnson joined Cheddar News' Closing Bell to discuss.
The Biden administration is giving businesses a deadline to implement a vaccination mandate, saying companies can take until after the holiday season. Andew Noymer, Associate Professor of Population Health and Disease Prevention at the University of California, Irvine, joined Cheddar to discuss.
Gaming technology studio Mythical Games recently raised $150 million in a round led by Andreesen Horowitz, bringing Mythical's valuation to above unicorn status at $1.2 billion. Mythical Games' mission is to create a new generation of gaming with play-to-earn games that allow players to play to win actual cryptocurrency. Now the company is taking it to another level with NFT technology, allowing players to play with characters they can truly own. Mythical Games CEO John Linden joined Cheddar News' Closing Bell to discuss.
Tesla CEO Elon Musk posed a question to his Twitter followers over the weekend: 'Should I sell 10% of my Tesla shares in order to pay off a looming $15 billion tax bill?' Shares plummeted after he posed the question, and just over half of 3.5 million Twitter voters said Musk should sell a fraction of his shares. Dan Ives, Managing Director of Equity Research at Wedbush Securities, joins Cheddar News' Closing Bell to discuss whether or not Musk's Twitter poll was significant amid his looming tax bill, and how investors are feeling after yet another controversial tweet from the Tesla chief.
E-scooter company Lime is gearing up to launch an IPO after raising $523 million in debt financing. CEO Wayne Ting joined Cheddar to talk about the decision behind the future public offering citing the fundraise as a sign of investor confidence, despite a massive drop-off in ridership amid the pandemic. He noted that some of the funds will not only be used to pay down debts but to also upgrade the company's fleet of e-bikes and scooters. "We're going to be investing $20 million of this funding towards our mission to get to net-zero on carbon by 2030," he said.
