U.S. stocks ended lower on Thursday, with consumer staples, real estate and technology shares leading the losses.
Investors continued to digest a mixed bag of corporate earnings. While results have largely come in ahead of expectations thus far, there have been some disappointments, and others haven’t produced the kind of blowout results seen necessary to continue pushing shares higher from elevated levels.
Stocks extended their decline as Treasurys sold off, pushing the yield on the 10-year note TMUBMUSD10Y, +0.16% toward a 2018 high. Stocks closed off the lows after a news report said that President Donald Trump was told that he isn’t a target of the probe being conducted by Special Counsel Robert Mueller into whether Trump’s campaign team colluded with Russia in the run-up to the 2016 presidential election.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.34% closed 83.18 points, or 0.3%, lower at 24,664.89, with the day’s decline pushing the blue-chip average back into negative territory for the year.
The S&P 500 SPX, -0.57% lost 15.51 points, or 0.6%, to end at 2,693.13, with nine of the 11 primary S&P 500 sectors closing in negative territory.
Financials and energy shares were the only industry groups closing in the green. Financials rallied 1.5%.
The Nasdaq Composite Index COMP, -0.78% fell 57.18 points to end at 7,238.06, a decline of 0.8%.
What’s driving markets?
First-quarter earnings reports have grabbed investors’ attention this week, with Netflix Inc. NFLX, -0.54% Goldman Sachs Group Inc. GS, +0.07% and UnitedHealth Group Inc. UNH, -0.27% among the companies that have posted encouraging results.
The S&P 500 components are expected to see earnings growth of 17.3% for the period, the fastest rate of expansion since 2011. The results have been enough to largely overshadow uncertainties such as trade policy questions and tensions over Syria.
What are strategists saying?
“It is clear that investors would prefer their president not being involved in an investigation over collusion with Russia,” said Diane Jaffee, senior portfolio manager at TCW, referring to the market’s ability to trim losses ahead of the closing bell.
Some analysts suggested that investors are beginning to anticipate a turn in the business cycle.
“There’s a growing fear that the good news we’ve seen over the past years is coming to an end, that we’re closer to a meaningful downturn in the economy than we had previously been expecting,” said Peter Kenny, senior market strategist at Global Markets Advisory Group.
Which stocks are in focus?
Shares in tobacco giant Philip Morris International Inc. PM, -15.58% tumbled 16% after the company posted weaker-than-expected revenue, along with a stronger-than-anticipated adjusted profit. The stock was on track for its biggest one-day percentage decline since being spun off from Altria Group Inc. MO, -6.05% in 2008. Altria fell 6%.
Shares in Amazon.com Inc. AMZN, +1.90% rose 1.9% after CEO Jeff Bezos disclosed in an annual letter to shareholders that the e-commerce juggernaut’s Amazon Prime subscription program has topped 100 million members world-wide.
Technology stocks were broadly lower, with chip makers particularly weak. Taiwan Semiconductor Manufacturing Co. Ltd. TSM, -5.70% gave an outlook that was below expectations, raising questions about demand for the overall industry. Its stocks fell 5.7%. Separately, reports late Wednesday that Facebook Inc. FB, +1.05% plans to design chips, providing another headwind for the sector.
The VanEck Vectors Semiconductor ETF SMH, -4.46% lost 4.4%. Among major chip makers, Advanced Micro Devices AMD, -2.41% fell 2.4% and Nvidia Corp. NVDA, -3.10% was off 3.1%.
Also weighing on tech was Apple Inc. AAPL, -2.83% which shed 2.8%.
Procter & Gamble Co.’s stock PG, -3.27% sank 3.3% after the consumer-products giant agreed to acquire a consumer-health business from Germany’s Merck KGaA MRK, +0.32% in a $4.2 billion deal. P&G also posted quarterly results that beat forecasts.
Shares in credit-card companyAmerican Express Co. AXP, +7.59% climbed 7.6% a day after reporting stronger-than-expected results.
Bank of New York Mellon Corp. BK, +5.70% reported first-quarter earnings and revenue that topped expectations. Shares rose 5.7%, helping to support the financial sector.
Aluminum producer Alcoa Corp. AA, +1.40% gained 1.4% after its results.
Blackstone Group LP BX, +1.07% reported first-quarter earnings that topped expectations. Shares rose 1.1%.
Aceto Corp. ACET, -64.05% dropped 64% after the developer of health products and pharmaceutical ingredients maker said it was negotiating credit agreement waivers with its lenders, cutting its dividend, taking a large impairment charge and initiating an evaluation of strategic alternatives.
Roku Inc. ROKU, +3.09% rose 3.1% after an analyst from Needham played down the potential impact of a deal that would see Amazon.com Inc. sell some products at Best Buy Co Inc. BBY, -2.73%
Which economic reports are in focus?
Initial jobless claims declined 1,000 to 232,000 in the latest week. While analyst had expected a somewhat steeper decline, claims remain near a 45-year low.
The Philadelphia Federal Reserve’s business-conditions index came in at 23.2 in April.
Federal Reserve Board Gov. Lael Brainard said there are “some signs of financial imbalances in the economy,” citing asset valuations and business leverage.
What are other markets doing?
European stocks SXXP, +0.02% ended modestly higher, after Asian markets closed with gains. Oil futures CLK8, -0.06% pulled back from 3 1/2 year high to settle 0.3% lower at $68.29.
Gold futures GCM8, -0.28% retreated from a one-week high to settle 0.4% lower at $1,348.80 an ounce.
The ICE U.S. Dollar Index DXY, +0.06% moved higher along with higher Treasury yields, trading up 0.4% at 89.938.
