Stocks pull back from records as growth concerns reignite; S&P 500 drops 0.9%

Stocks dipped on Thursday to give back gains after a record-setting session, with investors nervously eyeing signs that the economic recovery might get derailed.

The S&P 500, Dow and Nasdaq each pared losses after dropping by more than 1% at intraday lows. Thursday’s session marked the first time since June that the S&P 500 opened lower by more than 1%. A day earlier, the blue-chip index rose to a record closing high for the eighth time in the last nine sessions as concerns over a near-term monetary policy adjustment and sustainably high inflation abated. 

The benchmark 10-year Treasury yield sank further to hover around 1.29%, with the dip in rates reflecting both easing inflation expectations but also uncertainty over the sustainability over the recovery. Concerns over the global recovery also increased after Japan proposed re-instituting a state of emergency ahead of the Tokyo Olympics due to recent COVID-19 surges. 

“People have. some concerns about how the Delta variant is going to play out in the economy, and we don’t know what’s going to happen to the spending with consumers once unemployment benefits run out in the September time frame,” Julie Biel, Kayne Anderson Rudnick portfolio manager, told Yahoo Finance on Thursday. “I think there’s a lot of uncertainty, and how I would characterize this rally is, it is kind of a cynical rally, where people don’t necessarily feel as strongly about the economy, but they feel they have to stay invested. And so I think the fact that it is in this mindset means that it could pull back very quickly. So I would expect more volatility going forward.” 

Recent data on the economic recovery has been mixed, with job openings rising to yet another record high in May and labor scarcities curbing the pace of the rebound across industries. Thursday’s jobless claims report showed new weekly filings unexpectedly increased, with the number of new filers and total claimants still highly elevated compared to pre-pandemic levels. 

The Federal Reserve’s June meeting minutes underscored these and other lingering economic concerns and showed that central bank officials still saw some downside risk to the recovery that warranted their asset purchases and ultra-low interest rates to remain for the time being. As the Federal Open Market Committee’s minutes said, “The Committee’s standard of ‘substantial further progress’ was generally seen as not having yet been met, though participants expected progress to continue.”

“The minutes do not suggest an imminent shift in policy. In contrast to the market’s hawkish interpretation of the June meeting and Summary of Economic Projections (SEP), the minutes show a more dovish Committee,” Steven Ricchiuto, U.S. chief economist for Mizuho Securities, wrote in an email. “This is a balanced Committee that is planning in the face of an uncertain outlook.”

4:04 p.m. ET: Stocks pull back from records as growth concerns reignite; S&P 500 drops 0.9%

Here were the main moves in markets as of 4:04 p.m. ET:

  • S&P 500 (^GSPC): -37.28 (-0.86%) to 4,320.85

  • Dow (^DJI): -259.86 (-0.75%) to 34,421.93

  • Nasdaq (^IXIC): -105.28 (-0.72%) to 14,559.79

  • Crude (CL=F): +$0.89 (+1.23%) to $73.09 a barrel

  • Gold (GC=F): +$0.50 (+0.03%) to $1,802.60 per ounce

  • 10-year Treasury (^TNX): -3.3 bps to yield 1.2880%

1:15 p.m. ET: Stocks hold in the red, but come off session lows 

The three major indexes pared earlier losses but still traded lower Thursday afternoon, with jitters over the pace of the economic recovery still weighing on risk assets.

The S&P 500, Dow and Nasdaq were each off by between 0.7% and 0.8% intraday. At session lows, the Dow was off 1.5%, or 536 points. 

The materials, industrials and financials sectors underperformed in the S&P 500, though all 11 major sectors were in the red. Goldman Sachs, Visa and Salesforce were the worst-performers in the 30-stock Dow. Treasury yields also pared some earlier losses, and the 10-year yield hovered above 1.29%.

10:50 a.m. ET: Consumer spending on services over the last three months ‘has offset the drag from durable goods by three-fold’: Bank of America

Consumer spending has been heavily concentrated on services so far this year, Bank of America credit card data showed, with consumer mobility picking up and pent-up demand for travel getting released.

Bank of America’s credit card spending data for June showed retail sales excluding autos increased 0.4% month-on-month. The metric excludes all services except for restaurants “and therefore understates the strength in consumer spending given the shift in dollars toward services,” the firm added in a note Thursday. 

“Our measure of durable goods spending (furniture, electronics and building materials) was a negative contribution to the monthly change in total card spending over the last 3 months while services (restaurants, airlines and lodging) has been a positive contributor all year,” Bank of America economists Michelle Meyer and Anna Zhou wrote in a note. “To put this into perspective, the gain in services spending over the last three months has offset the drag from durable goods by three-fold. The more frequent weekly data suggest that this continued into July with a particularly notable improvement in travel-related spending through the early summer.” 

9:30 a.m. ET: Stocks open sharply lower

Here’s where markets were trading shortly after the opening bell:

  • S&P 500 (^GSPC): -60.24 points (-1.38%) to 4,297.89

  • Dow (^DJI): -385.04 (-1.11%) to 34,296.75

  • Nasdaq (^IXIC): -245.46 (-1.67%) to 14,416.08

  • Crude (CL=F): -$0.28 (-0.39%) to $71.92 a barrel

  • Gold (GC=F): +$14.30 (+0.79%) to $1,816.40 per ounce

  • 10-year Treasury (^TNX): -2.7 bps to yield 1.29%

9:07 a.m. ET: New jobless claims unexpectedly increased last week

The number of individuals filing new jobless claims unexpectedly rose during the week ended July 3, with the move higher reflecting a still-choppy recovery in the U.S. labor market. 

Initial jobless claims totaled 373,000 last week, coming in above the pandemic-era low of 350,000 expected. The prior week’s new claims were also revised up slightly to 371,000.

Continuing jobless claims, reported on a one-week lag, were slightly lower than expected for the week ended June 26, totaling 3.339 million versus the 3.35 million anticipated.

7:25 a.m. ET Thursday: Stock futures sink as concerns over COVID variants, economic recovery resurge

Here’s where markets were trading Thursday morning: 

  • S&P 500 futures (ES=F): 4,293.00, -56.75 points (-1.3%)

  • Dow futures (YM=F): 34,094.00, -474.00 points (-1.37%)

  • Nasdaq futures (NQ=F): 14,613.25, -189 points (-1.28%)

  • Crude (CL=F): -$0.39 (-0.54%) to $71.81 a barrel

  • Gold (GC=F): +$14.50 (+0.8%) to $1,816.60 per ounce

  • 10-year Treasury (^TNX): -4.5 bps to yield 1.275%

6:18 p.m. ET Wednesday: Stock futures gain

Here’s where markets were trading Wednesday evening: 

  • S&P 500 futures (ES=F): 4,351.25 +1.5 points (+0.03%)

  • Dow futures (YM=F): 34,588.00, +20 points (+0.06%)

  • Nasdaq futures (NQ=F): 14,807.00, +4.75 points (+0.03%)

Photo by: zz/STRF/STAR MAX/IPx 2021 3/21/21 Atmosphere in and around Wall Street and The New York Stock Exchange in the Financial District of Lower Manhattan, New York City on March 21, 2021 during the worldwide coronavirus pandemic. Here, a Wall Street sign. (NYC)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck