Stocks Lose Some Momentum
By Caitlin Ostroff, Akane Otani and Xie Yu
U.S. stocks slipped Thursday, paring gains from earlier in the week, after data showed another wave of Americans applied for unemployment benefits because of the coronavirus pandemic.
Markets initially wobbled between small gains and losses, then dropped solidly into negative territory as the afternoon progressed.
Thursday's drawback came after Labor Department data showed about 2.4 million Americans filed for unemployment benefits in the week ending May 16, extending a swift and severe deterioration in the labor market. More than 38 million Americans have filed applications since mid-March, when the pandemic brought business and travel around the country to a standstill.
The Dow Jones Industrial Average fell 101.78 points, or 0.4%, to 24.12 Thursday. The S&P 500 lost 23.1 points, or 0.8%, to 2948.51 and the Nasdaq Composite fell 90.90 points, or 1%, to 9284.88.
Despite Thursday's decline, stocks are still on pace for big weekly gains, with investors attributing the market's broader ascent to optimism that coronavirus vaccines might be available later this year. The U.S. Food and Drug Administration has fast-tracked the process for experimental vaccines, and drugmaker Moderna earlier this week reported positive results from the first human study of its experimental coronavirus vaccine.
Still, a viable product is at least months away. Some analysts caution that a sustained market rebound may be premature.
"Even if this is the vaccine everyone is hoping for, it's still 12 months before it comes to the market," said Seema Shah, chief strategist at Principal Global Investors. "What we're seeing today is more of a reality check. You've got undue optimism with the equity market."
Among individual stocks, Best Buy fell $3.56, or 4.4%, to $77.98 after the electronics retailer reported lower first-quarter sales and earnings.
TJX, the parent for T.J. Maxx and Marshalls, rose $3.45, or 6.8%, to $54.30 after the company said it has reopened more than 1,600 stores world-wide and that its stores could be largely reopened by the end of next month.
In Europe, stocks were broadly lower, with the pan-continental Stoxx Europe 600 dropping 0.7%.
Major stock indexes in Asia also fell, with China's Shanghai Composite Index closing down almost 0.6% and Japan's Nikkei 225 ticking down 0.2%.
In a fresh sign of rising tensions between Washington and Beijing, President Trump tweeted late Wednesday night that China's "disinformation and propaganda attack on the United States and Europe is a disgrace." That comes on top of the U.S. Senate on Wednesday approving legislation that could force Chinese companies to give up their listings on American stock exchanges.
"What the trade rhetoric does is it does create uncertainty in a market where there is lots and lots of uncertainty," said Justin Onuekwusi, head of retail multiasset funds at Legal & General Investment Management. "Any uncertainty will cause greater volatility to the fragile market rally we've seen."
Investors are trying to better understand the potential for an economic turnaround in the third quarter, according to Daniel Gerard, senior multiasset strategist at State Street Global Markets. For now, he said, they aren't aggressively adding to or cutting back on positions in riskier assets, such as stocks.
"We do not see anyone with a lot of conviction in risk-seeking, or risk-aversion," Mr. Gerard said.
Investors will watch China's annual legislative conclave, which starts Friday, for new spending plans, progress in coronavirus-vaccine development and more clues about economic-recovery patterns, Mr. Gerard said.
Write to Caitlin Ostroff at firstname.lastname@example.org, Akane Otani at email@example.com and Xie Yu at Yu.Xie@wsj.com