Dow looking to snap, give back all gains from four-day win streak
U.S. stock benchmarks accelerated a downtrend Thursday afternoon as heightened concerns about President Donald Trump's legislative agenda and news of a terrorist attack in Barcelona combined to foster selling on Wall Street. Technology shares were suffering the worst of the beating following disappointing results from Cisco Systems Inc.
The Dow Jones Industrial Average dropped 180 points, or 0.8%, to 21,845, as Cisco (CSCO) declined 4.3% after the networking-equipment company late Wednesday reported earnings that missed forecasts (http://www.marketwatch.com/story/cisco-shares-fall-after-company-predicts-another-drop-in-sales-2017-08-16) and predicted a drop in revenue next quarter, and Wal-Mart Stores Inc. (WMT) fell 1.8% after its results, which included lower-than-expected sales from its Sam's Club division (http://www.marketwatch.com/story/wal-mart-earnings-revenue-beat-estimates-2017-08-17).
The Dow is coming off a four-day string of gains and has risen in 14 of the past 18 trading days.
"Cisco is in the midst of a turnaround, and it is showing very slow progress in that, while Wal-Mart has had something like 12 straight quarters of revenue growth, which led to expectations getting a little ahead of themselves. They're just taking a little bit of a step back, and so is the market," said Mark Spellman, portfolio manager at Alpine Funds, which has a total of $3.8 billion in assets.
The S&P 500 dropped 24 points, or 1%, to 2,444, with 1% or more losses in the tech, industrials and financial sectors. All 11 of the S&P 500's sectors traded in the red.
The tech-heavy Nasdaq Composite Index fell 83 points, or 1.3%, to 6,262.
Read:This is the 'wall of worry' that stocks have climbed to rally 271% (http://www.marketwatch.com/story/this-is-the-wall-of-worry-that-stocks-have-climbed-to-rally-271-since-2009-2017-08-16)
Internationally, in what police characterized as a terrorism attack, a van plowed into a crowd in the Ramblas tourist area (http://www.marketwatch.com/story/vehicle-strikes-pedestrians-in-central-barcelona-reports-2017-08-17) Thursday in Barcelona, Spain, killing at least 13 with reports that hostages were being held at a nearby restaurant by gunmen. Following the attacks, the CBOE Volatility jumped nearly 30% (http://www.marketwatch.com/story/wall-streets-fear-gauge--the-vix--jumps-nearly-30-amid-falling-dow-barcelona-terror-attack-2017-08-17).
Market participants said they were also following reports that Gary Cohn was resigning as economic adviser to President Donald Trump, but the White House has countered those rumors (https://www.reuters.com/article/us-usa-trump-cohn-idUSKCN1AX1UU).
U.S. equity benchmarks had been facing selling pressure at the start of trade, as European markets (http://www.marketwatch.com/story/european-stocks-veer-lower-as-fed-rate-hike-doubts-hurt-bank-shares-2017-08-17) ended lower after a three-day winning streak.
"In Europe, we had weakness out of the gate and then we had worries about the Cohn news," said Mark Kepner, managing director of sales and trading at Themis Trading, in an interview. "With the light volume, Barcelona is not something that the market is going to handle well."
The equity market was also digesting minutes from the Federal Reserve's July meeting, as well as the dissolution of a pair of Trump's business advisory panels (http://www.marketwatch.com/story/trump-business-councils-disband-amid-wave-of-ceo-exits-2017-08-16), which underscores the president's challenges in promoting his Wall Street-friendly policies.
POTUS has faced a furor after he repeatedly blamed "both sides" for violence last weekend at a white-supremacist rally in Charlottesville, Va.
Overall, Fed minutes were read as dovish, lowering expectations of another rate increase this year.
"There's no direct market impact in what Trump has done recently, but if things continue to be so polarized that his agenda is completely dead on arrival, that would have a negative impact," Alpine's Spellman said.
Fed in focus: The dollar rebounded a little on Thursday, with the ICE Dollar Index edging up 0.1%. The greenback had declined Wednesday after Fed minutes from the July meeting (http://www.marketwatch.com/story/fed-eyes-september-debt-drawdown-some-want-patient-on-rates-2017-08-16) suggested the central bank is worried about sluggish inflation.
"This kind of uncertainty leads to fresh doubts over whether the Fed will be able to raise rates again this year and clearly investors are growing more nervous," said Konstantinos Anthis, researcher at ADS Securities in a note.
Read:Trump agrees to seek Seoul's OK before any action on North Korea, says President Moon (http://www.marketwatch.com/story/trump-agrees-to-seek-seouls-ok-before-any-action-on-north-korea-says-president-moon-2017-08-17)
Economic news: Initial jobless claims in the period running from Aug. 6 to Aug. 12 declined by 12,000 to 232,000, the Labor Department said Thursday.
Philly Fed's manufacturing index (http://www.marketwatch.com/story/philadelphia-fed-factory-gauge-eases-but-hints-at-future-strength-in-august-2017-08-17) for August came in at 18.9, compared with a reading of 17.0 expected by economists polled by MarketWatch and 19.5 in the prior period.
A reading of industrial production missed expectations, rising by 0.2% in July, compared with expectations for a rise of 0.3% and 0.4% gain in the prior month.
See:MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
Stock movers:Alibaba Group Holding Ltd.(BABA) jumped 3.8% after the Chinese e-commerce giant reported earnings and sales above expectations (http://www.marketwatch.com/story/alibabas-stock-jumps-after-profit-revenue-rise-above-expectations-2017-08-17).
L Brands Inc. (LB) slumped 8.2% after the Victoria's Secret parent late Wednesday cut its forecast (http://www.marketwatch.com/story/victorias-secret-parent-l-brands-shares-fall-after-company-cuts-full-year-view-2017-08-16) for third-quarter and full-year earnings. The stock was the biggest percentage decliner on the S&P.
NetApp Inc.(NTAP) fell 6.2% despite reporting earnings that came in ahead of expectations (http://www.marketwatch.com/story/data-storage-company-netapp-shares-edge-up-on-first-quarter-earnings-beat-2017-08-16). The stock has gained nearly 40% over the past 12 months.
(http://www.marketwatch.com/story/wal-mart-earnings-some-analysts-say-traffic-has-fallen-others-say-it-has-grown-2017-08-14)After the market closes, Gap Inc.(GPS), Ross Stores Inc.(ROST), and Applied Materials Inc.(AMAT) are expected to report.
Other markets:Asia markets closed mixed (http://www.marketwatch.com/story/asian-stocks-broadly-bounce-higher-on-tech-gains-2017-08-16) as investors there digested the Fed minutes.
Oil prices (http://www.marketwatch.com/story/oil-prices-rebound-after-eia-fueled-selloff-2017-08-17) rose, paring back from a decline after data Wednesday showed U.S. oil production has jumped to a more than two-year high. Gold prices (http://www.marketwatch.com/story/gold-marches-higher-as-haven-demand-persists-after-trump-dissolves-councils-2017-08-17) rose 0.7%, while most metals traded in positive territory.
--Sara Sjolin, Mark DeCambre and Ryan Vlastelica contributed to this article.
(END) Dow Jones Newswires
August 17, 2017 14:02 ET (18:02 GMT)