Stocks returned some of their recent gains on Thursday as a choppy trading day on Wall Street ended with a mixed ending for major indexes.
The S&P 500 closed down 0.1% after oscillating between small gains and losses. The Dow Jones Industrial Average fell 0.3%, while the Nasdaq rose 0.4%.
Energy stocks, the biggest gainers in the benchmark S&P 500 so far this year, were the biggest drag on the market as the price of U.S. crude oil fell below $90 a barrel for the first time since early February, before Russia invaded Ukraine.
Gains in technology stocks, retailers and elsewhere helped contain losses in energy, health care and other sectors.
The muted trading came as investors continued to scrutinize the latest updates on the economy and corporate earnings ahead of the government’s monthly snapshot of the country’s labor market on Friday.
Investors are looking at jobs data to assess whether a tightening labor market could prompt the Federal Reserve to eventually ease interest rate hikes as it fights inflation, potentially reducing the risk that the bank central causes a recession.
“They wanted to stifle demand and temper inflation and they wanted to do that without unduly affecting the labor market in a negative way,” said Katie Nixon, chief investment officer of Northern Trust Wealth Management. “So far the Fed will assess all of this as expected and they will continue.”
The S&P 500 slipped 3.23 points to 4,151.94 and the Dow fell 85.68 points to 32,726.82. The Nasdaq gained 52.42 points to 12,720.58. The Russell 2000 Index of small company stocks fell 2.47 points, or 0.1%, to close at 1,906.46.
All major indices except the Dow Jones are on pace for weekly gains after Wednesday’s rally.
The price of U.S. crude oil fell 2.3% to $88.54 a barrel on Thursday, weighing on shares of energy companies. Exxon Mobil fell 4.2% and Occidental Petroleum fell 5.8%.
Health care stocks also lost ground. Eli Lilly fell 2.6%.
Tech stocks and a mix of retailers, homebuilders and industrial companies made strong gains. Advanced Micro Devices climbed 5.9%, Amazon added 2.2%, Lennar rose 3.4% and Deere gained 1.7%.
Stocks have meandered this week, leaving major indexes mostly higher. August’s gain follows a bumper July that was the S&P 500’s best month since the end of 2020. But markets remain volatile as investors try to figure out the economy’s path amid the highest inflation in four decades and the efforts of central banks to control rising prices.
Earnings remain the focus on Wall Street as investors search for more clues about the impact of inflation on various industries. The maker of Twinkie Hostess fell 3.9% after giving investors a disappointing profit forecast for the year. Bleach and consumer products maker Clorox tumbled 4.7% after also reporting weak earnings forecasts.
Companies have raised prices for everything from food to clothing to help offset the impact of inflation on supply chains, but the pressure has become too much for many consumers. A spike in gasoline prices throughout the year worsened inflation and prompted spending cuts.
The Federal Reserve aggressively raised interest rates in an attempt to slow the economy and fight inflation, alongside other central banks. The Bank of England on Thursday launched its biggest rate hike in more than a quarter century.
Recent economic data on retail sales and employment reports showed that the economy is already slowing.
“The cure for high inflation is sometimes high inflation,” Nixon said. “The narrative that we could have reached or exceeded peak inflation is being validated by some of the data coming out.”
Rising consumer demand and lack of supply for many goods initially fueled inflation. The resulting rise in prices prompted consumers to cut back on spending. But the Fed’s aggressive interest rate policy has investors worried that the central bank may be dragging the economy down too much and pushing it into a recession.
This concern is reflected in the bond market, where the two-year Treasury yield remains higher than the 10-year Treasury yield. It’s a relatively rare event that some see as a precursor to a recession within the next year or two.
The 10-year Treasury yield fell to 2.66% from 2.74% on Wednesday night.
A bright spot in the economy as a whole has been a strong job market. New data from the Labor Department on Thursday showed that the number of Americans applying for unemployment benefits last week rose in line with expectations, while the number of unemployed continues to rise slightly.
The latest data follows updates earlier this week showing that job vacancies have fallen, but still remain at record highs. Friday’s jobs report from the Labor Department in July is expected to show signs of tightening.
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