Technology companies helped drag stocks lower Thursday on Wall Street, knocking the S&P 500 into the red for the week.
The benchmark S&P 500 index dropped 0.4% and is now on track for a 0.3% weekly loss. Technology companies, whose pricey valuations make them more sensitive to inflation fears, were the biggest weight on the market. Microsoft fell 0.6%, and Apple lost 1.2%.
Retailers, hotel operators and a variety of other companies that rely on direct consumer spending also posted some of the biggest declines, as did communications companies. Etsy slid 5.4%, Tesla dropped 5.3%, Wynn Resorts fell 4.1% and Facebook lost 0.9%. Banks and health care companies rose.
The selling came as investors weighed the latest economic reports showing that unemployment claims are falling but labor costs are rising. Traders were also looking ahead to the government’s latest monthly jobs report Friday, which could provide more clarity on the economic recovery and the potential for higher inflation.
“There’s less conviction about what the jobs report may be, so you’re seeing the markets move a little sideways here,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “We’ve gotten all these fantastic growth numbers, and now we’ve got to look past that and look toward the future at the actual growth beyond the pandemic, and people are just trying to get a handle on what that may look like.”
The S&P 500 fell 15.27 points to 4,192.85. The Dow Jones Industrial Average dropped 23.34 points, or 0.1%, to 34,577.04. The tech-heavy Nasdaq lost 141.82 points, or 1%, to 13,614.51. The Russell 2000 index of smaller companies gave up 18.59 points, or 0.8%, to 2,279.25.
Bond yields rose. The yield on the 10-year Treasury rose to 1.63% from 1.59% late Wednesday.
AMC Entertainment slumped 17.9%, shedding gains from a brief rally, after the movie theater operator’s announcement that it would sell more shares following a huge run-up in its stock price on a surge of interest from individual investors. The stock is still up about 2,300% this year.
Markets have been wobbly all week as investors closely watch the labor markets for more signs of economic growth and consider any information that could give more clues about rising inflation. Labor costs rose at a 1.7% rate in the first quarter, up from the initial estimate that costs had fallen 0.3%. That could stoke more fears that inflation might run hotter than expected.
Rising inflation is expected as the economy recovers from the pandemic’s impact, but the key question for many on Wall Street is whether it will be temporary or more permanent.
“The main concern in the markets, rightfully so, is inflation,” said Cliff Hodge, chief investment officer for Cornerstone Wealth. “Data points are beginning to confirm the view that inflation is likely to be more sticky.”
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