Walgreens nixes Rite Aid merger; Blue Apron to make trading debut
U.S. stocks were under pressure Thursday as the technology sector retreated, weighing on the Nasdaq, though a rally in financial shares helped to limit the broader market's decline.
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Investors also digested a mixed batch of economic data, as a modestly improved read on economic growth was offset by a slight rise in jobless claims.
The Dow Jones Industrial Average fell 22 points, or 0.1%, to 21,433.
The S&P 500 index fell 5 points, or 0.2%, at 2,435. The Nasdaq Composite Index tumbled 48 points, or 0.8% to 6,186.
The outsize weakness in the Nasdaq came as the technology sector (XLK) fell 1.1%. Among the biggest decliners in the space, Microsoft Corp. (MSFT) declining 1.2% while Google-parent Alphabet Inc. (GOOGL) was trading 1.7% lower.
Tech shares have struggled in recent weeks, with the sector down 2.5% thus far this month amid concerns the group's rally may be running out of steam at a time when valuations are stretched by many metrics.
However, a tech rally on Wednesday helped to give the Nasdaq its best one-day move since Nov. 7.
On the upside, financial shares (XLF) jumped 1.4% after the U.S.'s 34 biggest banks passed the Federal Reserve's stress test (http://blogs.marketwatch.com/thetell/2017/06/28/fed-stress-test-and-bank-capital-return-plans-live-blog/)and received green lights for plans to return capital to shareholders. The Fed determined the country's biggest banks (KBE) have "strong" levels of capital and would be able to keep lending even during a severe recession.
Goldman Sachs (GS) and Morgan Stanley (MS) were among the biggest gainers in early trading, with both stocks up more than 2%. J.P. Morgan Chase & Co. (JPM) added 2.6% while Citigroup Inc. (C) advanced 3.5%.
"We've had some major players in the financial sector be overly impacted in a negative way for a long time. They've been beaten down, but news like this could help them become one of the leading sectors in the second half of the year," said Kevin Miller, chief executive officer of E-Valuator Funds, which have about $150 million in assets.
Bonds shadow central banks: Financial shares have also been tracking a rally in long-term Treasury yields . A selloff in U.S. and European bonds on Thursday sent yields higher as investors maneuvered around potential moves by the Federal Reserve, the European Central Bank and the Bank of England. Bond prices and yields move inversely.
"Comments from central bankers in recent days suggest that perhaps it will not be too long before the Fed is joined by other central banks in tightening monetary policy," said Richard Perry, market analyst at Hantec Markets.
"In recent days, there have been hawkish indications from the ECB's Draghi, the Bank of England's Carney and Bank of Canada's Poloz, all of which have signaled a potential end to their easing programs could be close," he noted.
Buck under pressure: The ICE Dollar Index , which measures the U.S. dollar against a basket of six currencies, was down 0.1% at 95.89.
"Playing currencies is a game of relatives, and with traders questioning the Fed's ability to tighten in light of subdued inflation, the dollar is under pressure," said Perry.
Both the euro and the pound have marched higher against the greenback, he noted.
The weaker dollar was seen as giving a boost to some dollar-denominated commodities, such as oil and copper, on Thursday. Those moves could aid resource-related stocks on Wall Street.
Economic docket: In the latest economic data, the latest revision to first-quarter GDP (http://www.marketwatch.com/story/poor-start-to-2017-not-really-first-quarter-gdp-raised-again-to-14-2017-06-29)was raised to 1.4%, up from the previous estimate of 1.2% and double the initial 0.7% read.
Separately, jobless claims rose by 2,000 in the latest week (http://www.marketwatch.com/story/jobless-claims-edge-up-by-2000-to-24400-2017-06-29), although they remain at levels that are extremely low from a historical standpoint.
See: MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic).
A busy week of Fed speakers rounds off with James Bullard in London. The St. Louis Fed president is scheduled to talk about the economy and monetary policy at the Official Monetary and Financial Institutions Forum at 1 p.m. Eastern Time. He isn't on the Fed's current rate-setting board.
Stocks in focus:Rite Aid Corp. (RAD) tumbled 25% after Walgreens Boots Alliance Inc. (WBA)canceled its merger agreement with Rite Aid (http://www.marketwatch.com/story/walgreens-terminates-rite-aid-merger-replaces-with-agreement-to-buy-2186-stores-2017-06-29). Instead, Walgreens is buying 2,186 Rite Aid stores and related assets, sending Walgreens shares up 1.3%. In a related move, shares of Fred's Inc. (FRED) plunged 19% after a deal to buy some Rite Aid stores was terminated
Blue Apron Holdings Inc. rose 5.4% in its trading debut after its initial public offering priced at $10 a share late Wednesday, on the low end of its estimate, valuing the meal-kit delivery company at $1.9 billion.
Read:Why Blue Apron's valuation just got slashed (http://www.marketwatch.com/story/why-blue-aprons-valuation-just-got-slashed-2017-06-28)
Pier 1 Imports Inc. (PIR) tumbled 5.8% after it reported first-quarter revenue that missed expectations (http://www.marketwatch.com/story/pier-1-imports-stock-sinks-as-revenue-misses-target-2017-06-28).
Other markets: Copper prices were aided by the dollar's pullback, but gold was modestly lower. Oil prices were rising, with the dollar rally and a sizable weekly decline in U.S. crude production seen as factors.
Stock markets in Asia (http://www.marketwatch.com/story/financial-stocks-lead-asian-market-gains-2017-06-28) logged gains, but European benchmarks were feeling the weight (http://www.marketwatch.com/story/european-stocks-step-lower-as-euro-rally-outweighs-gains-for-banks-miners-2017-06-29) of a rising euro.
(END) Dow Jones Newswires
June 29, 2017 10:56 ET (14:56 GMT)