A trader works on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, USA, 10 August 2021.
Andrew Kelly | Reuters
The S&P 500 climbed higher Thursday on concerns that the Federal Reserve is taking the stimulus away.
The broad index rose 0.1% to 4,405.80. The Nasdaq Composite gained 0.1% to 14,541.79. The Dow Jones Industrial Average lost 66.57 points, or nearly 0.2%, to 34,894.12.
The S&P 500 had a two-day losing streak while the Dow saw its third straight loss. Minutes of the meeting, released on Wednesday from the Fed’s July meeting, showed that the central bank had begun cutting its monthly bond purchases by $ 120 billion before the end of the year.
For the week, the three major indices are in the red.
“The recent fit of market fear appears to be a combination of investor dizziness, finding an excuse to take profit and the bumpy road to reopening the economy, with new flavors of Covid on the rise,” said Art Hogan, chief market strategist at National Securities, it says in a note.
Tech stocks like Microsoft and Netflix closed in the green on Thursday.
Nvidia stock rose 3.9% after the chip giant’s quarterly earnings and revenue surpassed Wall Street estimates on strong graphics card sales.
“I don’t think we’re in a bubble, which I think many bears believe,” said innovation investor Cathie Wood in CNBC’s Tech Check. “We are focusing on the deflationary forces that are building up in the economy.”
Defensive stocks like consumer staples and healthcare also rose. Procter & Gamble and Merck gained just under 1.2% and 0.8%, respectively.
Meanwhile, stocks closely related to the economy were causing losses. The steel manufacturer Nucor lost 2.7%. Oil companies Devon Energy and Occidental Petroleum lost 3% and 5.8%, respectively. Bergmann Freeport-McMoRan fell 4.3%. General Motors was down 3.4%. Reopening games like airlines also closed lower.
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WTI crude fell more than 2% to $ 63.69 and copper lost nearly 2% on worries about global growth without the Fed’s assistance in bond purchases. The yield on 10-year government bonds slipped to 1.24% in the late afternoon. (1 basis point corresponds to 0.01%.)
Robinhood stock fell 10.2% after its first earnings report as a public company. The app warned investors that a slowdown in trading could hurt third quarter results.
“For the three months ending September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and significantly fewer refinanced accounts than in the previous quarter,” the company said in the earnings release.
Investors digested mixed economic data released Thursday. Initial jobless claims hit a new pandemic-era low of 348,000 last week, falling more sharply than expected the week before.
The Philadelphia Fed Index, a measure of growth in the region, was still showing expansion, but at a worse than expected level. The August value was 19.4 and thus below the 22 consensus of economists polled by Dow Jones.
Goldman Sachs cut its economic growth forecast for the current quarter from 9% to 5.5%, adding to the negative sentiment. The company also sees higher-than-expected inflation for the rest of the year.
“The influence of the delta variant on growth and inflation is proving to be somewhat greater than we expected,” wrote Jan Hatzius, chief economist at Goldman Sachs, in the press release.
– CNBC’s Michael Bloom contributed to the coverage.
