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Wall Street ends lower as recovery momentum concerns spark sell-off

Stock MarketsJul 08, 2021 06:45PM ET
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© Reuters. FILE PHOTO: The New York Stock Exchange is pictured amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., April 16, 2021. REUTERS/Carlo Allegri

By Stephen Culp

NEW YORK (Reuters) - Wall Street lost ground on Thursday, with the S&P 500 and the Nasdaq pulling back from record closing highs in a broad sell-off driven by uncertainties surrounding the pace of the U.S. economic recovery.

As the bond market rallied on a flight to safety, all three major U.S. stock indexes tumbled. The Dow's economically sensitive transports plunged 3.3%, its biggest daily drop since October.

Still, analysts noted that the market remained close to historical highs.

"We're still effectively at all-time highs, so I wouldn’t read much into today's market action," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York.

"The bond market is reflecting that the probability of there being material inflation over a long period of time is very unlikely, and that’s the fear that had been driving yields higher" before the recent rally, Pursche added.

"We’re in a goldilocks scenario, with enough growth to support the economy but not so much that the Fed changes policy beyond what they’ve already announced," Pursche said.

On Wednesday, the U.S. Federal Reserve released minutes from its latest monetary policy meeting, which showed the central bank does not yet believe the economy has fully recovered, yet a debate on tightening policy has begun in earnest.

The Dow Jones Industrial Average fell 259.86 points, or 0.75%, to 34,421.93, the S&P 500 lost 37.31 points, or 0.86%, to 4,320.82 and the Nasdaq Composite dropped 105.28 points, or 0.72%, to 14,559.79.

Sensing cracks in the U.S. economic recovery, traders covered short positions in the bond market. The yield of the benchmark 10-year U.S. Treasury note fell for the eighth consecutive session.

All 11 major sectors of the S&P 500 ended in the red, with financials suffering the largest percentage loss.

The number of U.S. workers filing first-time applications for unemployment benefits unexpectedly ticked up to 373,000 last week, a sign that the U.S. labor market recovery remains choppy.

Beijing's ongoing clampdown on U.S.-listed Chinese companies fed into the risk-averse mood.

Since China's opening salvo over the weekend against ride-hailing app Didi Global Inc, Beijing has broadened its scrutiny of U.S.-listed Chinese companies beyond the tech sector.

Didi shares dropped 5.9%, while Alibaba (NYSE:BABA) Group and Bidu Inc shed 3.9% and 3.7%, respectively.

Big banks are due to kick off second-quarter reporting next week. Analysts expect aggregate year-on-year earnings growth of 65.4% for companies in the S&P 500 index, up from the 54% growth forecast made at the beginning of the quarter, according to Refinitiv.

"Much like inflation data I want to see what earnings growth over two years rather than one," Pursche said. "That would be a much better guide as to how strong earnings are going to be."

"Coming out of the pandemic one-year data points are so distorted that they're almost irrelevant."

Declining issues outnumbered advancing ones on the NYSE by a 3.13-to-1 ratio; on Nasdaq, a 1.98-to-1 ratio favored decliners.

The S&P 500 posted 22 new 52-week highs and no new lows; the Nasdaq Composite recorded 39 new highs and 148 new lows.

Volume on U.S. exchanges was 10.56 billion shares, compared with the 10.65 billion average over the last 20 trading days.

Wall Street ends lower as recovery momentum concerns spark sell-off
 

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Comments (12)
Rony Joe
Rony Joe Jul 08, 2021 3:17PM ET
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no other excited news
Mitchel Pioneer
Mitchel Pioneer Jul 08, 2021 1:07PM ET
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Another day of predictable, criminal manipulation in the US Ponzi Scheme.
Ted Byrley
Ted Byrley Jul 08, 2021 1:00PM ET
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Go to coffeezilla on Youtube.
Todd Gray
Todd Gray Jul 08, 2021 12:55PM ET
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Short term reaction, my ****** Taking away the neo-liberals manufactured meme reality of sentiment, by using rational, traditional metrics, the markets are 65% overvalued. Maybe more. Real inflation is much larger. These guys are doing nothing more the stretching out hosing the American public, for as long as they can. Plus, the get a little writers fee, and a sliver of fame. They are memes leading meme's. And, their deep in that dark rabbit hole.
Matt Kay
Matt Kay Jul 08, 2021 12:07PM ET
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Aaaaaand BOOM worries are gone. 2% of losses erased. Totally normal market continues to go up exponentially all day every day.
Theo Ross
Theo Ross Jul 08, 2021 11:53AM ET
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Today the market doubts, and it could very much take a real punch soon. It could come after the July earnings.. Of before.. I don't feel good about this, I sold today, sometimes at a loss.. But I will sleep better like this..
Michael Brown
Michael Brown Jul 08, 2021 11:53AM ET
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the biggest mistake you make is to sell when it will rebound very soon
Mitchel Pioneer
Mitchel Pioneer Jul 08, 2021 11:48AM ET
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Ah yes, 11AM sharp, and with the predictability of the rising tide, the criminal miracle unfolds in the biggest investment JOKE in the world.  Watch in awe as another major loss vanishes into thin air, ad the criminal manipulation continues in the US Ponzi Scheme, greatest financial FRAUD in history.
Vincent Li
Vincent Li Jul 08, 2021 10:18AM ET
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Great opportunity to load up when there is blood on the street.. Lol
Khwarizmi Algebra
Khwarizmi Algebra Jul 08, 2021 8:18AM ET
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This is on all stocks in case you are blind, not only chinese stocks. All world stock markets.
Song Trinh
Song Trinh Jul 08, 2021 8:17AM ET
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Just sale china stock and gets out quick..Biden acting..
Brandon Wooton
Brandon Wooton Jul 08, 2021 6:52AM ET
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my goodness, still beating this dead horse virus nonsense... maybe people are starting to get worried the massively overblown stock markets are about to meet their reckoning.
palmer long
palmer long Jul 08, 2021 6:21AM ET
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the Banksters are just setting up the market AGAIN, for there big take down squeeze . This is how they make so much money every quarter.
 
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