Private-sector employers add 153,000 jobs in June
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U.S. stocks declined Thursday on the back of a combination of geopolitical jitters and growing signs that global central banks are inching closer to unwinding policies that have helped to support prices in both stocks and government bonds.
Meanwhile, a round of early economic data, including readings on private-sector payrolls and weekly layoffs, appeared to do little to upend the thinking about the pace of the Federal Reserve's policy plans.
The S&P 500 was off by 14 points, or 0.6%, to 2,417, with nearly all of its main sectors trading in negative territory. Telecoms, technology and health-care shares were leading the early declines, down more than 1%.
Some analysts speculated that rising bond yields are hurting investor sentiment.
"People are nervous about bond yields going up and you can see that in exaggerated moves in technology stocks and financials," said Ian Winer, head of the equities division at Wedbush Securities.
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The Nasdaq Composite Index fell 53 points, or 0.9%, to 6,097, erasing its modest gains from the previous session.
The Dow Jones Industrial Average was off by 89 points, or 0.4%, to 21,388. Trading lower were shares of General Electric Co. (GE) and Intel Corp. (INTC), down more than 1%.
There are a lot of things keeping risk appetite in check," said Chris Beauchamp, senior market analyst at IG in London. "Geopolitical worries are beginning to bear down," on Wall Street and in Europe , where losses in regional benchmarks on Thursday accelerated, he said.
"The rotation out of techs started and [investors] moved into financials. You've also got a broader move out of equities back to bonds to provide a safe haven, to some degree," as investors increasingly key in on risks including escalating tensions surrounding North Korea's test-launch this week of an intercontinental ballistic missile, Beauchamp said.
President Donald Trump said Thursday in Warsaw that he's considering "some pretty severe things" in response to North Korea's (http://www.marketwatch.com/story/trump-considering-pretty-severe-things-over-north-korea-threat-2017-07-06) ongoing efforts to develop nuclear weapons that can reach the U.S.
Read:U.S., Russia clash at U.N. over approach to North Korea threat (http://www.marketwatch.com/story/us-russia-clash-at-un-over-approach-to-north-korea-threat-2017-07-06)
"The market is not getting too panicky just yet, but you're into that July, August, September period where we could see a bit of a grind," he added.
Economic docket:Private-sector employers (http://www.marketwatch.com/story/private-sector-job-growth-throttles-back-in-june-adp-says-2017-07-06)added a seasonally-adjusted 153,000 jobs during the month, below the 180,000 jobs that a consensus of economists had forecast. Meanwhile, initial jobless claims (http://www.marketwatch.com/story/us-jobless-claims-climb-4000-to-248000-2017-07-06) in the period between June 25 and July 1 increased 4,000 to a seasonally adjusted 248,000.
Economists use these numbers to get a feel for the official nonfarm payrolls due on Friday, with the consensus estimate at 179,000 new jobs created in June. The Federal Reserve closely watches labor-market conditions as part of its monetary-policy assessment, and the report comes as investors continue to unpack the Fed minutes released Wednesday.
Those minutes left many uncertain as to policy makers' strategy for reducing the Fed's $4.5 billion in debt holdings (http://www.marketwatch.com/story/fed-might-start-balance-sheet-drawdown-in-september-fomc-minutes-hint-2017-07-05), which has acted as support for the U.S. economy.
Separately, the trade deficit (http://www.marketwatch.com/story/trade-deficit-drops-23-in-may-but-the-trend-is-no-friend-2017-07-06)fell 2.3% to $46.5 billion in May from $47.6 billion in April, largely because of fewer imports of cellphones and other consumer goods, but the longer-run outlook for the U.S. was still grim.
The Institute for Supply Management's nonmanufacturing index (http://www.marketwatch.com/story/service-sector-accelerates-in-june-ism-survey-finds-2017-07-06)rose to 57.4% in June from 56.9% in May, topping the MarketWatch-compiled economist consensus for a reading of 56.5%.
As for Fed speakers, Vice Chairman Stanley Fischer will speak about government policy and labor productivity at 7:30 p.m. Eastern at Martha's Vineyard Hebrew Center Summer Institute in Vineyard Haven, Mass.
See: MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic).
Stocks in focus: GE shares fell 1.4% after the European Union's antitrust watchdog (http://www.marketwatch.com/story/ge-canon-merck-kgaa-accused-of-antitrust-moves-2017-07-06) said GE may have misled regulators when the EU was reviewing its $1.65 billion deal with LM Wind Power.
Tesla Inc.(TSLA) declined 2.8% after the electric-car maker's Model S failed to receive a top safety award (http://www.marketwatch.com/story/teslas-stock-drops-after-model-s-fails-to-qualify-for-top-safety-award-2017-07-06) from the Insurance Institute for Highway Safety. Its shares tumbled on Wednesday (http://www.marketwatch.com/story/teslas-stock-tumbles-into-correction-territory-but-analysts-sees-new-highs-ahead-2017-07-05) after a disappointing sales-delivery update.
L Brands Inc.(LB) shares tumbled 9.3% as Victoria's Secret's parent company posted a 6% drop in June sales (http://www.marketwatch.com/story/victorias-secret-parent-l-brands-shares-fall-after-june-sales-decline-2017-07-06).
Shares of Costco Wholesale Corp.(COST) rose 0.8% after the retailer reported better-than-expected sales numbers for June.
Other markets: The ICE Dollar Index , which measures the buck against a basket of six currencies, was down 0.3% at 96.04. Gold gained modestly to trade above $1,225 an ounce. Oil futures jumped more than 1% (http://www.marketwatch.com/story/oil-bounces-back-after-worst-loss-in-a-month-ahead-of-eia-data-2017-07-06).
Treasury yields moved higher, with the yield on the 10-year note up 5 basis points to 2.37%.
Stock markets in Asia finished mostly lower, with the Nikkei Stock Average losing 0.4%.
(END) Dow Jones Newswires
July 06, 2017 11:23 ET (15:23 GMT)