Investing.com – U.S. stocks closed lower on Thursday, as investors ditched large-cap tech stocks amid a fresh warning from a Wall Street analyst, comparing the recent rally in tech shares to the rally in the late 1990s, which lead to a tech bubble.
Shares of Facebook, Alphabet and Amazon ended the day in negative territory weighing on the broader market, after Jefferies strategist Sean Darby in note to clients, compared the technology stock run we're seeing now to the "melt-up" that occurred in the late 1990s.
Darby noted that both periods had declining inflation and low rates, alongside a thriving digital economy, warning that it didn't end well.
The bearish note from Jefferies overshadowed the release of upbeat economic reports suggesting that the U.S. economy continues to strengthen.
The U.S. Department of Labor reported Thursday that initial jobless claims decreased by 5,000 to 237,000 in the week ended June 4, beating forecasts of a 3,000 decline.
In a separate report, The Philly Fed said its index for current manufacturing activity in the region decreased to 27.6 in June from 38.8 in May. Analysts had expected a reading of 24.
The move lower in US stocks comes a day after the Federal Reserve hiked interest rates for the second time this year and increased expectations for an additional rate hike this year.
In corporate news, Nike (NYSE:NKE) announced a new business structure, which among other changes involves cutting its global workforce by 2%.
The Dow Jones Industrial Average closed at 21,359.90. The S&P 500 lost 0.22% while the Nasdaq Composite closed at 6,165.50, down 0.47%.
The ‘Bulls and Bears’ on Wall Street
The top Dow gainers for the session: GE up 1.7%, CAT up 1.6%, while BA rose 1.6%.
NKE down 3.2%, GS down 1.4% and WMT down 1.2%, were among the worst Dow performers of the session.