U.S. equities stumbled on Thursday, breaking a five-session winning streak for the Dow Jones Industrial Average, which finished with a loss of 0.5%. The S&P 500 and the Nasdaq Composite declined as well, losing 0.4% apiece, but the small-cap Russell 2000 managed to advance, adding 0.6%.
Trading was choppy at times, but much of the day was spent in a sideways trend. The S&P 500 traded between 2812.05 (-0.1%) and 2799.77 (-0.6%).
Investors received a heavy dose of corporate news, most of which was earnings related. IBM (IBM 149.24, +4.72, +3.3%) and Taiwan Semi (TSM 39.81, +1.40, +3.6%) climbed after reporting their quarterly results, but American Express (AXP 100.17, -2.81, -2.7%), eBay (EBAY 34.11, -3.84, -10.1%), Travelers (TRV 125.18, -4.82, -3.7%), BNY Mellon (BK 52.73, -2.91, -5.2%), Philip Morris (PM 80.90, -1.25, -1.5%), and Alcoa (AA 41.56, -6.40, -13.3%) all sold off.
Outside of earnings, Walt Disney (DIS 112.13, +1.44, +1.3%) rallied following news that Comcast (CMSA 34.91, +0.87, +2.6%) will not counter Disney's offer for 21st Century Fox's (FOXA 46.65, -0.03, -0.1%) entertainment assets. Conversely, AbbVie (ABBV 89.95, -4.45, -4.7%) fell after Citron Research called it "the next great drug short."
Nine of eleven sectors finished Thursday in the red, with financials (-1.4%) pacing the retreat, trimming its weekly gain to a still impressive 2.0%. The telecom services space (-1.1%) was the next-worst performer, but no other group lost more than 0.6%. On the flip side, utilities (+0.9%) and real estate (+1.0%) were the two advancers.
U.S. Treasuries rallied on Thursday, pushing yields lower across the curve; the benchmark 10-yr yield dropped three basis points to 2.85%.
In Washington, President Trump criticized the Fed in a recorded CNBC interview, saying he's "not thrilled" about interest rate hikes. Mr. Trump's comments were seen as controversial as presidents typically refrain from speaking on monetary policy. The White House quickly issued a response to the criticism, saying the president respects the Fed's independence.
During the same interview, Mr. Trump also commented on the strengthening dollar, saying it puts the U.S. at a disadvantage. The U.S. Dollar Index was up 0.4% at a 12-month high before the president's comments, but gave it all back and then some in a knee-jerk response. The Index was back in the green at Wall Street's closing bell, however, up 0.2% at 95.00.
Trade-related matters were also on radar after President Trump threatened "tremendous retribution" against the European Union if his meeting with EU officials next week doesn't produce positive results. Separately, China's foreign ministry responded to Wednesday comments made by NEC Director Larry Kudlow, saying Mr. Kudlow's assertion that Chinese President Xi is refusing to compromise on Beijing's trade policies was "shocking" and "bogus."
With today's losses, the S&P 500 enters Friday's session with a slim weekly gain of 0.1%.
Reviewing Thursday's economic data, which included weekly Initial Claims, the Philadelphia Fed Index for July, and the Conference Board's Leading Economic Index for June:
- The latest weekly initial jobless claims count totaled 207,000, while the Briefing.com consensus expected a reading of 220,000. Today's tally was below the revised prior week count of 215,000 (from 214,000). As for continuing claims, they increased to 1.751 million from a revised count of 1.743 million (from 1.739 million).
- The key takeaway from this report is that it covers the period in which the survey for the employment situation report for July is conducted, so the low level of claims is bound to feed expectations for another month of strong nonfarm payrolls growth.
- The Philadelphia Fed Survey for July rose to 25.7 (Briefing.com consensus 22.0) from an unrevised 19.9 in June.
- The key takeaway from the report, though, may be that the diffusion index for future general activity decreased for the fourth straight month, falling from 34.8 to 29.0.
- The Conference Board's Leading Economic Index increased 0.5% in June (Briefing.com consensus +0.4%), and the May reading was revised to 0.0% from +0.2%.
- The key takeaway from the report is that strength among the leading indicators remained widespread; however, the 2.5% increase in the index over the first half of 2018 was slower than the 3.2% growth rate seen over the second half of 2017.
Looking ahead, investors will not receive any economic data on Friday.
- Nasdaq Composite +13.4% YTD
- Russell 2000 +10.8% YTD
- S&P 500 +4.9% YTD
- Dow Jones Industrial Average +1.4% YTD