Wall Street posted a moderate decline today, giving back part of the previous 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 drop-off in economic growth. 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 raise 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, pull-backs, rallies. We’re hopefully looking for a bottom from which to build a rally later this year.”
The Dow Jones industrial average sank 60.35, or 0.54%, 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%, to 1,245.60, and the Nasdaq composite index lost 18.22, or 0.85%, to 2,122.98.
Bond yields remained inverted as prices fell. The yield on the 10-year Treasury note climbed to 5.21% from 5.16% late on Wednesday, while the two-year yield rose to 5.24%. 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 70.84dollars on the New York Mercantile Exchange.
Elsewhere, the US dollar surged against the Japanese yen and was flat versus European currencies. Gold prices were lower at about 582dollars per ounce.
With few economic reports to guide investors, stocks have drifted aimlessly this week amid persistent fears that rising inflation could prompt the Fed to keep hiking rates despite a slowing economy. Thursday’s retreat erased much of Wednesday’s advance, leaving the major indexes barely changed so far this week.
“I’m not seeing today’s decline as particularly worrisome,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “I think it’s more profit taking and a wait-and-see attitude than a return of the real fear factor.”
In economic news, the Conference Board’s index of leading indicators declined 0.6% in May, a slightly wider loss than the 0.5% drop projected by economists. Wall Street has been wary of the possibility that the economy might moderate too quickly.
The Labor Department said the number of jobless claims filed grew by 11,000 to 308,000 last week, just beating economists’ estimate of 305,000. The upswing reinforced beliefs that the job market is beginning to weaken.
Health-care stocks stumbled after The Wall Street Journal said several major hospitals were scaling back their use of expensive drug-coated coronary stents. Dow component Johnson & Johnson slid 61 cents to 61.18dollars, while Boston Scientific Corp. shed 50 cents to 18.61dollars.
The airline sector slumped on news that British and US regulators are probing several carriers over ticket prices and fuel surcharges. British Airways fell 4.09dollars to 63.70dollars, but United Airlines parent UAL rose 25 cents to 32.50dollars.
Federated Department Stores reached a deal to sell its Lord & Taylor chain to two real estate investment firms for about 1.2 billion dollars. Federated added 33 cents to 36.13dollars.
Declining issues led advancers by 2 to 1 on the New York Stock Exchange, where volume of 1.47 billion shares trailed the 1.67 billion shares that changed hands Wednesday.
The Russell 2000 index of smaller companies declined 2.63, or 0.38%, to 688.04.