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Market Snapshot: U.S. stocks pause after another round of records as investors assess economic data

U.S. stocks saw modest losses Thursday as investors digested data showing an improvement in weekly jobless benefit claims but a pickup in wholesale inflation, after back-to-back record finishes for the Dow Jones Industrial Average and the S&P 500 index.

How are markets trading?
  • The Dow Jones Industrial Average
    DJIA,
    -0.29%

    fell 123.45 points, or 0.4%, at 35,361.52 after edging to an intraday record in early trade.
  • The S&P 500
    SPX,
    -0.04%

    was down 3.02 points, or 0.1%, at 4,444.68.
  • The Nasdaq Composite
    COMP,
    +0.07%

    edged up 6.85 points, or 0.1%, to 14,771.98.

On Wednesday, the Dow industrials closed up 220.30 points, or 0.6%, to finish at a record 35,484.97, after hitting an intraday, all-time high of 35,501.16. The S&P 500 index rose 0.3%, or 10.95 points, to close at a record 4,447.70, after establishing an intraday record at 4,449.44. The Nasdaq Composite Index closed down 22.95 points, or 0.2%, at 14,765.14.

What’s driving the market?

A round of economic data showed first-time claims for jobless benefit benefits came in at 375,000 last week, matching estimates and near a pandemic low. The producer-price index was up 7.8% year over year in July versus 7.3% in June, while the core PPI reading, which excludes food and energy, accelerated to 6.1% from 5.5%.

Analysts said the data could add to expectations for the Federal Reserve to move more quickly toward beginning to taper its monthly asset purchases.

“The trend in continuing claims is the positive takeaway. These numbers should continue to improve as more pandemic assistance programs expire next month,” said Sean Bandazian, investment analyst for Cornerstone Wealth.

“We are still in the camp that school openings, the expiration of extended unemployment benefits and continued vaccinations will translate into strong jobs data in the coming months and give the Fed the green light to taper sooner rather than later,” he said.

Meanwhile, July data likely marks the peak for PPI “as supply pressures gradually unwind in the coming months and demand moderates from its blistering pace in the first half of the year,” said Mahir Rasheed, U.S. economist at Oxford Economics, in a note.

“However, stubborn pandemic disruptions will continue to hamper supply through year-end, keeping producer prices sticky and prompting the Fed to begin QE tapering in early 2022,” Rasheed said.

The push to records for the Dow and S&P 500 on Wednesday were fueled by data that showed consumer prices easing somewhat, with the index rising 5.4% from a year ago in July. That number was in line with June and lower than some predictions.

But some investors might be wondering how high stocks can keep going, as they have been at or near new highs for a while, despite the rapid rise of new coronavirus cases across the U.S. and elsewhere, said Pierre Veyret, technical analyst at ActivTrades, in a note to clients.

“While some traders continue to ride this bullish wave, others have already started to hedge their portfolio against any potential decline, which explains the current rotation from growth stocks (tech shares) to cyclical values,” he said.

The International Energy Agency on Thursday downgraded its 2021 demand forecasts, blaming the delta coronavirus variant as a curb on oil demand. The IEA upgraded its 2022 forecast, however, saying demand should return to pre-pandemic levels midway through next year. The Organization of the Petroleum Exporting Countries, or OPEC, left its outlook for 2021 and 2022 demand growth unchanged, while raising its forecast for non-OPEC supply.

Investors will be watching for more news on COVID-19 vaccines, amid a report the Food and Drug Administration may authorize a third dose of Pfizer
PFE,
+1.24%

-BioNTech
BNTX,
+7.73%

and Moderna
MRNA,
+3.55%

shots for those with weakened immune systems. The emergency-use clearances could be announced as soon as Thursday, the New York Times reported late Wednesday.

Which companies are in focus?
What are other markets doing?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    1.358%

    rose 2 basis points to 1.359%. Yields and debt prices move in opposite directions.
  • The ICE U.S. Dollar Index
    DXY,
    +0.07%
    ,
    a measure of the currency against a basket of six major rivals, rose 0.1%.
  • Oil futures edged lower, with the U.S. benchmark
    CL.1,
    -1.03%

    down 0.5% at $68.88 a barrel on the New York Mercantile Exchange. Gold futures
    GC00,
    -0.21%

    drifted lower, down 0.2% at $1,749 an ounce.
  • In European equities, the Stoxx Europe 600
    SXXP,
    +0.09%

    rose 0.1%, while London’s FTSE 100
    UKX,
    -0.49%

    was down 0.5%.
  • In Asia, the Shanghai Composite
    SHCOMP,
    -0.22%

    and Japan’s Nikkei 225
    NIK,
    -0.20%

    each fell 0.2%, while Hong Kong’s Hang Seng Index
    HSI,
    -0.53%

    lost 0.5%.

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