Stocks retreat on weak economic news
Wall Street posted a moderate decline Thursday, giving back part of the prior session’s gains as investors once again fretted about interest rates and the economy.
A slight rise in weekly unemployment claims met expectations of a weakening job market, but a greater-than-forecast drop in the Conference Board’s index of leading indicators stoked concerns about a dropoff in economic growth. Meanwhile, higher oil prices and rising bond yields also weighed on Wall Street’s mood.
The market continued its familiar pattern of up-and-down trading ahead of the Federal Reserve’s policy meeting next Wednesday and Thursday. Stocks have steadied somewhat after a six-week freefall on worries that escalating core prices could prompt the Fed to keep boosting rates, but the risk of an economic downturn has kept the market from making substantial gains.
Although investors are certain the Fed will hike interest rates again, they have been nervous about the central bank’s opinion of inflation and unwilling to place bets while the outlook remained murky.
“The base-building process is going to take a couple months to complete,” said Steven Goldman, chief market strategist for Weeden & Co. “We’re going to see pockets of strength, pullbacks, rallies. We’re hopefully looking for a bottom from which to build a rally later this year.”
At the close, the Dow Jones industrial average sank 60.35, or 0.54 percent, to 11,019.11, after tumbling as much as 93 points earlier in the session. The Dow gained almost 105 points Wednesday.
Broader stock indicators also were lower. The Standard & Poor’s 500 index slid 6.60, or 0.53 percent, to 1,245.60, and the Nasdaq composite index lost 18.22, or 0.85 percent, to 2,122.98.
Bond yields remained inverted as prices dropped. The yield on the 10-year Treasury note climbed to 5.21 percent from 5.16 percent late Wednesday, while the 2-year yield rose to 5.24 percent. Higher short-term yields over long-term yields is seen as a signal of investor pessimism.
Crude futures gained after the government reported only a small increase in gasoline stocks as the peak summer driving season gets under way. A barrel of light crude added 51 cents to settle at $70.84 on the New York Mercantile Exchange.
In economic news, the Conference Board’s index of leading indicators declined 0.6 percent in May, a slightly wider loss than the 0.5 percent drop projected by economists. Wall Street has been wary of the possibility that the economy might moderate too quickly.
Declining issues led advancers by 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume of 2.21 billion shares trailed the 2.47 billion shares that changed hands Wednesday.
The Russell 2000 index of smaller companies declined 2.63, or 0.38 percent, to 688.04.