Stocks fell Thursday following another record-setting session on Wall Street, as Treasury yields resumed their march higher. Elsewhere, a new report showed U.S. initial unemployment claims unexpectedly rose last week despite loosening social distancing standards and improving weather.
The S&P 500 fell by about 0.8%, while the Nasdaq declined by 1.7% amid a renewed drop in technology shares. The Dow edged lower, dipping back below 33,000. The pressure on growth stocks came as Treasury yields extended recent gains, and the benchmark 10-year yield added another nearly 10 basis points to a more than one-year high of 1.74%.
Stocks seesawed back to losses on Thursday after reaching record highs a day earlier, with both the S&P 500 and Dow closing at record levels on Wednesday. These moves in turn came after the Federal Reserve telegraphed that rates would remain at their current near-zero levels through at least 2023, even as Federal Open Market Committee members upgraded their forecasts for economic growth and inflation over the next several years. Federal Reserve Chair Jerome Powell reiterated that the central bank would tolerate some overshooting of its inflation and employment targets as the economy makes strides in recovering, and would keep monetary policy loose until more data confirms the economy is back on track.
These comments helped to at least momentarily assuage a market that had grown increasingly nervous over a near-term tightening of monetary policy. Economic data has largely topped expectations, nearly $2 trillion in additional fiscal stimulus has been injected into the economy and the COVID-19 vaccine roll-out has accelerated in recent days, with more than 20% of the U.S. population receiving at least one dose to date. All of these factors have raised the specter that economic growth might overshoot even economists’ recently raised targets and lead to a quick rise in inflation, warranting a faster pivot from central bankers.
But the Fed “left all of its policy levers on a maximally accommodative setting. This occurred even as it acknowledged both better incoming data and an improved growth outlook,” JPMorgan economist Michael Feroli said in a note Wednesday. “Of note, while seven Committee participants now look for a hike by the end of ’23—up from five in December—that wasn’t enough to move the closely-watched median forecast, which still looks for unchanged policy rates for the next three years.
“With policy rates on hold for a long time, tapering will be the next important development for monetary policy, though the Committee and Chair Powell gave no indication of when that will happen or what the ‘substantial further progress’ criteria means in more detail,” he added, referring to the Federal Reserve’s crisis era, $120 billion per-month asset purchase program.
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11.01 a.m. ET: Electric vehicle-maker stocks under pressure after Lordstown Motors reveals SEC inquiry
Shares of Lordstown Motors (RIDE) slid more than 9% Thursday morning after the company said late Wednesday that the U.S. Securities and Exchange Commission had sent it a request for information over accusations made by the short-seller Hindenburg Research. Hindenburg alleged last week that the company, which went public via SPAC merger last October, used “fake orders” to lure in investors and made other misleading statements.
Lordstown Motors CEO Steve Burns said during a call with analysts Wednesday that the company is “cooperating” with the SEC’s inquiry.
Shares of other small electric vehicle stocks including Nio (NIO), Workhorse (WKHS) and Xpeng (XPEV) fell intraday on Thursday following the report, and amid a broader drawdown in technology shares. Hindenburg Research had also released a scathing report last September over the electric car-maker Nikola (NKLA), which led to Department of Justice and SEC probes that in turn generated millions in legal fees for the company.
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10:50 a.m. ET: Bank of America card spending rose 7.4% over last year as more in-person activities resume
Credit card spending among Bank of America customers jumped year-over-year, and over the same period in 2019 during the week ended March 13, as consumers’ propensity to spend ramped back up as social distancing standards eased and weather warmed.
“Total card spending as measured by aggregated BAC credit and debit card data showed a 7.4% 1-year change and 8.9% 2-year change for the 7-days ending March 13,” Bank of America economists led by Michelle Meyer wrote in a note. “Looking ahead to next week, we expect the 1-year growth rate to jump significantly given the lockdowns that went into effect last year.”
“Card spending next week will also likely be greatly impacted by the distribution of stimulus checks,” they added.
Card spending on airlines also grew 13% over last year, returning to positive territory on March 12. However, over the same period in 2019, card spending on airlines is still down 45%.
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9:30 a.m. ET: Stocks open lower as Treasury yields surge
Here’s where markets were trading Thursday shortly after market open:
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S&P 500 (^GSPC): -24.30 (-0.6%) to 3,949.82
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Dow (^DJI): -34.72 (-0.11%) to 32,980.65
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Nasdaq (^IXIC): -170.69 (-1.26%) to 13,354.08
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Crude (CL=F): -$1.27 (-1.97%) to $63.33 a barrel
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Gold (GC=F): -$6.60 (-0.38%) to $1,720.50 per ounce
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10-year Treasury (^TNX): +9.7 bps to yield 1.738%
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8:30 a.m. ET: Initial jobless claims unexpectedly rose last week
New weekly jobless claims unexpectedly jumped last week even as more social distancing restrictions were rolled back and harsh winter weather abated.
Initial unemployment claims rose to 770,000 during the week ended March 13, the Labor Department said Thursday. Consensus economists were looking for new claims to fall to a new pandemic-era low of 700,000, according to Bloomberg consensus data. The prior week’s new claims were also upwardly revised to 725,000, from the 712,000 previously reported.
Continuing claims, which measure the total number of Americans still receiving state unemployment benefits, showed a ninth straight week of declines. However, these improved less than expected, coming in at 4.124 million versus the 4.034 million expected.
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7:20 a.m. ET Thursday: Stock futures trade mixed, Nasdaq futures drop
Here’s where markets were trading as of 7:21 a.m. ET Thursday morning:
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S&P 500 futures (ES=F): 3,955.5, down 18.5 points or 0.47%
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Dow futures (YM=F): 33,054.00, up 37 points or 0.11%
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Nasdaq futures (NQ=F): 13,041.5, down 160 points or 1.21%
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Crude (CL=F): +$0.02 (+0.03%) to $64.62 a barrel
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Gold (GC=F): +$6.20 (+0.36%) to $1,733.30 per ounce
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10-year Treasury (^TNX): +9.7 bps to yield 1.737%
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6:02 p.m. ET Wednesday: Stock futures roughly flat
Here were the main moves in markets as of 6:02 p.m. ET:
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S&P 500 futures (ES=F): 3,977.5, up 3.5 points or 0.09%
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Dow futures (YM=F): 33,048.00, up 31 points or 0.09%
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Nasdaq futures (NQ=F): 13,214.00, up 12.5 points or 0.09%
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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