MARKET SNAPSHOT: Stock Market Retreats As Retail Sector Slumps, Snap Inc.'s Stock Tanks

By Wallace Witkowski and Anora Mahmudova, MarketWatch Features Dow Jones Newswires

Macy's stock plunges as revenue drop was larger than expected

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U.S. equity benchmarks on Thursday traded lower, but were well off their worst levels of the session, Thursday as a clutch of weaker-than-expected earnings reports and lingering concerns that President Donald Trump's pro-business agenda may face delays sapped buying appetite.

Particular weakness in the retail sector, with a popular exchange-traded fund that tracks major retailers, the SPDR S&P Retail ETF(XRT), off 2.2%, weighed on investor sentiment.

The Nasdaq Composite retreated from a record set, as the parent of Snapchat, Snap Inc.(SNAP), reported a $2.2 billion loss in its first quarter late Wednesday in its first quarter as a publicly traded company, sending shares of the disappearing-message company tumbling 21%. The tech-heavy index was down 12 points, or 0.2%, to 6,117.

The S&P 500 index also pulled back from its record close, declining 6 points, or 0.2%, to 2,393, with nearly all of its main sectors in the red. Real estate and consumer-discretionary stocks led the decliners.

The Dow Jones Industrial Average gave up 22 points, or 0.1%, to 20,899, but was down as much as 0.7%, or about 145 points, earlier in the session. Microsoft Corp.(MSFT), Home Depot Inc.(HD) and Intel Corp (INTC) were leading the losses, each down more than 1%.

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Higher oil prices failed to support stocks Thursday. U.S. crude prices settled up 1.1% (http://www.marketwatch.com/story/oil-boosted-by-signs-us-crude-glut-is-shrinking-2017-05-11) at $47.83 a barrel, on the heels of data showing the biggest weekly drawdown for inventory since December, but energy shares were trading nearly flat.

"Both corporate earnings and economic data were pretty good in the first quarter and underpinned the rally so far. But with earnings season almost over, we might see some sideways moves until June when the Fed is likely to raise rates," said Mark Kepner, managing director of sales and trading at Themis Trading.

Weekly jobless claims fell by 2,000 to 236,000, while continuing claims fell to the lowest level since November 1988. Low levels of layoffs underline a strong labor market. U.S. producer prices showed a broad-based gain in April, making for the largest annual advance in five years.

Kepner noted that very low levels of realized and implied volatility increase the odds of pullbacks in the near term.

The measure of implied volatility on the S&P 500, the CBOE Volatility Index , was up 3.7% at 10.59, hovering near historic lows.

Trump distractions and calling the Fed's bluff: The prior session's moves came after the shock firing of former Federal Bureau of Investigation Director James Comey, but the stock market's reaction to this was fairly sanguine (http://www.marketwatch.com/story/heres-why-the-stock-market-isnt-freaking-out-about-the-comey-firing-2017-05-10), despite questions over whether it would crimp Trump's ability to push through market-friendly policies. In an interview, Trump called Comey a "showboat" and a "grandstander" (http://www.marketwatch.com/story/trump-calls-comey-a-showboat-and-a-grandstander-in-nbc-interview-2017-05-11) and said he was going to fire him regardless of recommendation.

"It's as simple as, 'Are we in a better position or in a worse position than yesterday for getting things done?', and people are reassessing that question," said.Ian Winer, director of equity trading at Wedbush Securities, in an interview.

Joel Kruger, currency strategist at LMAX Exchange, said while politics could factor into stock movements, Federal Reserve policy will likely dictate the direction for equities.

"Conversations about a stock market top are certainly not without merit. But it has also been abundantly clear stocks will only be at risk when the market truly believes the Fed isn't going to fold its hand when it comes to forward guidance," Kruger wrote in emailed comments.

"We may be getting close to that point, but until then, investors will keep pushing their bets and calling the Fed's bluff," he said.

Early Thursday, New York Fed President William Dudley said trade protectionism is a "dead end" that will eventually harm the U.S. economy, Reuters reported (http://www.nasdaq.com/article/in-trumps-shadow-fed-official-says-trade-barriers-a-dead-end-20170511-00297). The comments, in a speech on the benefits and challenges of globalization in Mumbai, were seen as implied criticism of Trump's policies, even though Dudley didn't mention the U.S. leader by name.

Stock movers: Shares of Snapchat parent Snap tumbled 21% after the messaging app reported a $2.2 billion loss (http://blogs.marketwatch.com/thetell/2017/05/10/snap-user-growth-to-be-key-focus-in-first-earnings-report-live-blog/) in its first set of earnings since going public.

Read: Snap's CEO is the key to that huge loss (http://www.marketwatch.com/story/why-snap-lost-22-billion-in-its-first-quarter-as-a-public-company-2017-05-10)

Shares of Macy's Inc.(M) fell 15.6% after the retailer reported a worse-than-expected (http://www.marketwatch.com/story/macys-says-were-not-dead-after-earnings-miss-2017-05-11)slide in revenue in the first quarter. Shares of other traditional retailers dropped with shares of Nordstrom Inc.(JWN) down 7.5% and shares of Kohl's Corp.(KSS) down 6.2%.

Straight Path Communications Inc.(STRP) shares sank 20% after the company confirmed an agreement to be bought by Verizon Communications Inc.(VZ) in a deal that values Straight Path at a deep discount to Wednesday's closing price (http://www.marketwatch.com/story/straight-paths-stock-plunges-after-verizon-merger-deal-2017-05-11).

Whole Foods Market Inc.(WFM) rose 2.4% after the grocery-store chain announced a new stock buyback plan () and released earnings that met forecasts.

Nvidia Corp. (NVDA) shares were on track for a record (http://www.marketwatch.com/story/nvidia-stock-extends-gains-by-another-6-to-put-it-on-track-for-fresh-record-2017-05-11), rising more than 7%.

Other markets: Asian markets finished higher (http://www.marketwatch.com/story/oil-gains-lift-most-asian-markets-but-china-sags-on-liquidity-worries-2017-05-11), with China squeezing out a gain of 0.1% as investors fretted over liquidity worries. European stocks finished lower (http://www.marketwatch.com/story/italian-banks-a-bright-spot-as-european-stocks-fall-back-2017-05-11) while the FTSE 100 rose fractionally (http://www.marketwatch.com/story/ftse-100-adrift-ahead-of-bank-of-englands-super-thursday-update-2017-05-11) (http://www.marketwatch.com/story/ftse-100-adrift-ahead-of-bank-of-englands-super-thursday-update-2017-05-11) (http://www.marketwatch.com/story/ftse-100-adrift-ahead-of-bank-of-englands-super-thursday-update-2017-05-11).

Read:Italian banks a bright spot as European stocks fall back (http://www.marketwatch.com/story/italian-banks-a-bright-spot-as-european-stocks-fall-back-2017-05-11)

Gold prices (http://www.marketwatch.com/story/gold-holds-small-gains-as-us-producer-prices-jump-2017-05-11) settled up 0.4% at $1,224.20 an ounce as the U.S. Dollar index was flat.

The yield on a 10-year Treasury note inched 1 basis point lower to 2.404%.

--Barbara Kollmeyer in Madrid contributed to this article.

(END) Dow Jones Newswires

May 11, 2017 14:47 ET (18:47 GMT)