U.S. stocks struggled for direction on Thursday, with major indexes paring an early advance and the Nasdaq down sharply as major technology stocks sold off and offset an uptrend in banking stocks.
What are markets doing?
The Dow Jones Industrial Average DJIA, +0.59% rose 80 points, or 0.3%, to 25,277. The S&P 500 SPX, +0.01% was up 2 points at 2,774, a gain of 0.1%. The Nasdaq Composite Index COMP, -0.69% sank 37 points to 7,652, a decline of 0.5%. At the open, the Nasdaq inched slightly higher, notching an all-time intraday record. Both the S&P and the Nasdaq are coming off four straight daily gains.
What is driving the market?
The biggest declining sector of the day by far was technology, which had an outsize impact on the Nasdaq, which is heavily weighted toward the industry. Among notable decliners, Facebook Inc. FB, -1.74% fell 2.2%, Microsoft Corp. MSFT, -1.01% was down 1.3%, Google-parent Alphabet Inc. GOOGL, -1.10% lost 1.8%, and Intel Corp. INTC, -1.82% was down 1.8%. Many of these stocks have recently traded at records.
The tech weakness was offset by financials, with banks among the biggest advancers. Financial-services shares also outperformed on Wednesday as bond yields climbed after European Central Bank officials suggested they are ready to reveal more about their plans for exiting an aggressive quantitative-easing program at their meeting next week.
The market is now pricing in an about 90% chance of a rate rise in July 2019, compared with last week, when a hike in October 2019 was considered the most likely outcome, according to Reuters.
Treasury yields continued slightly higher on Thursday with the 10-year benchmark rate TMUBMUSD10Y, -0.48% up 1.4 basis points at 2.988%, according to FactSet.
Yields rise as bond prices fall, and climbing rates are generally bullish for banks’ business models.
Goldman Sachs Group Inc. GS, +1.02% rose 1.5%, Citigroup Inc. C, +0.86% climbed 1%, JPMorgan Chase & Co. JPM, +0.78% added 0.8% and Wells Fargo & Co. WFC, +0.43% put on 0.6%. The Financial Select Sector SPDR Fund XLF, +0.54% rose 0.6%.
What are strategists saying?
“At the moment, the U.S. economy seems to be doing pretty well, but valuations may already largely reflect that, and valuations are above average. We need more earnings growth to keep pushing share prices higher, and we need to watch the economy itself to see whether it can deliver that kind of growth,” said John Carey, portfolio manager at Amundi + Pioneer Investments.
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Stock movers
Five Below Inc. FIVE, +21.46% jumped 21% after the discount retailer late Wednesday reported earnings that beat forecasts.
Johnson & Johnson JNJ, +0.33% rose 0.2% after Fortive Corp. FTV, +4.28% said late Wednesday it agreed to buy Johnson & Johnson’s Advanced Sterilization Products business for $2.7 billion. Fortive shares rose 3.4%.
Twitter Inc. TWTR, -2.27% slipped 2.4% after saying late Wednesday it plans to sell at least $1 billion in convertible bonds.
Furniture retailer Conn’s Inc. CONN, +21.44% jumped 17% after reporting earnings that topped forecasts.
General Electric Co. GE, +0.47% introduced a new company, AiRXOS, which will integrate air and ground space to help manage traffic for unmanned vehicles. GE rose 0.1%, but remains down 3.2% thus far this week.
What’s on the economic calendar?
Initial jobless claims fell slightly in early June, keeping the rate of layoffs in the U.S. near a 50-year low.
Household debt numbers for the first quarter are expected at noon Eastern and consumer credit for April are slated for 3 p.m.
There are no Federal Reserve speakers as the central bank is in its blackout period ahead of its meeting next week.