U.S. stocks fell on Thursday, with major indexes slumping in a broad decline as some disappointing quarterly results and uncertainty over how to interpret the Federal Reserve’s recent policy statement left investors on the sidelines.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, -1.48% fell 240 points, up 1%, to 23,694. If the blue-chip average closes lower on Thursday, that will mark its fifth straight daily decline, as well as its 10th decline of the past 12 sessions. With the decline, the Dow is at risk of closing below its 200-day moving average for the first time since early April.
What’s driving markets?
Investors continued to weigh the next move from the Federal Reserve, which on Wednesday acknowledged U.S. inflation is ticking higher. Rising rates, along with a shrinking Fed balance sheet, is widely seen as one of the primary risks facing markets.
Economists, however, said the Fed’s language indicated the central bank wasn’t eager to accelerate the pace of rate increases even if inflation posts some relatively hot readings over the summer.
Rate increases bring in the prospect of higher borrowing costs for corporations and consumers, as well as strengthening in the dollar, which can all send ripples through global stock markets.
Investors will be on the alert for developments from Beijing, where U.S. and Chinese officials are meeting for discussions on tariffs and other trade issues. Worries about trade hostilities between the top two global economies have roiled financial markets in recent months.
What are strategists saying?
“The primary thing missing from the market right now is something to spur us higher. There’s no great catalyst, and if strong earnings reports aren’t enough to do it, what would be? That’s why everyone is closer to the sell button than the buy button,” said JJ Kinahan, chief strategist at TD Ameritrade.
“The economy is performing well, but there’s so much uncertainty that there’s no conviction to hold one sector over another. No one has conviction in their buying, which has an impact on confidence overall.”
Which economic data are in focus?
Jobless claims rose by 2,000 in the latest week, though they remained near multidecade lows. Separately, the productivity of American businesses rose 0.7% in the first quarter, but there’s little sign of long-term improvement in what’s been a weak link for the U.S. economy.
The Markit services purchasing managers index for April came in at 54.6, compared with 54 in March. The Institute for Supply Management’s nonmanufacturing index fell more than expected in April, dropping to 56.8, while factory orders rose 1.6% in the month.
Check out: MarketWatch’s Economic Calendar
Which stocks are in focus?
Tesla Inc. TSLA, -7.32% lost 7% on heavy volume. The electric-car maker beat expectations for adjusted losses and sales in its quarterly earnings, but shares dropped during a long conference call in which Chief Executive Elon Musk gave analysts and the media the cold shoulder. The stock is down 11% thus far this year.
New York Times Co. NYT, -4.24% shares dipped 0.7% after it reported first-quarter earnings that beat expectations.
After the markets close, companies including Herbalife Nutrition Ltd. HLF, -0.59% Activision Blizzard Inc. ATVI, -0.83% Xerox Corp. XRX, -3.73% and GoPro Inc. GPRO, -1.34% are expected to release their quarterly financial updates.