Thursday’s Stock Market Close: US Equities Fall On Another Grim Jobless Claims Report, Yields Drop

U.S. stocks tumbled on Thursday as traders digested another big jobless claims report and mulled a mixed batch of corporate earnings and economic data.

The Dow Jones Industrial Average dropped 135.39 points to 26,734.71, while the S&P 500 fell 10.99 points to 3,215.57 and the Nasdaq Composite Index tumbled 76.66 points to 10,473.83.

Thursday’s volume on the New York Stock Exchange totaled 3.41 billion shares with 1,311 issues advancing, 57 setting new highs, and 1,663 declining, with six stocks setting new lows .

Active movers were led by Boxlight Corp. (BOXL), NIO Inc. (NIO) and Ford Motor Co. (F).

About 1.3 million Americans filed for unemployment benefits last week, marking 16 consecutive weeks of initial jobless claims surpassing 1 million.

Heather Long of the Washington Post tweeted: “[Four] months into this crisis and the U.S. is still hemorrhaging jobs… The level of jobless claims is stalling -- and that's a very worrying sign.”

U.S. retail sales rose by 7.5% in June, well above the expected 5% increase.

Paul Ashworth, chief U.S. economist at Capital Economics, said the retail sales data may harbinger a big economic recovery in the third quarter.

“But with the new wave of infections leading to renewed closures and restriction in some states, we still think the balance of risks to that third-quarter forecast lie to the downside,” he added.

Bank of America (BAC) saw its second quarter profit drop by 52%, while Morgan Stanley (MS) delivered outstanding results.

Homebuilder sentiment climbed 14 points to 72 in July, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said NAHB Chairman Chuck Fowke. “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.”

Mainland Chinese stocks endured a big sell-off, with the Shanghai composite index plunging more than 4%, despite the fact that China’s gross domestic product grew 3.2% in the second quarter.

“The problem is, this [recovery in China] is still uneven,” said Helen Qiao, chief greater China economist at Bank of America Corp., referring to China GDP. “It is hard to see how China can remain on a firm footing at a time when the rest of the world is still coping with a very deep recession.”

The European Central Bank kept its interest rates and emergency coronavirus stimulus program unchanged on Thursday.

“We are not out of the woods yet and are still far away from returning to pre-COVID-19 economic levels,” said Nate Fischer, chief investment strategist at Strategic Wealth Partners. “The market is in need of a health-care solution, as the economy was forced to shut down for a health-care issue. So far, we’ve had fiscal and monetary assistance to this problem. Until a real medical remedy is found, the market will remain volatile.”

Some analysts are looking ahead to tech earnings.

“Over the next few weeks the core tech titans are set to report earnings,” said Dan Ives, an analyst at Wedbush. “This will be a pivotal few weeks for investors to gauge how the tech stalwarts business models/trends are holding up in this unprecedented COVID-19 storm and will be a key barometer for overall consumer and enterprise spending trends during this semi-lockdown backdrop.”

Overnight in Asia markets finished lower, as China’s Shanghai Composite index plunged 4.5%; Japan’s Nikkei-225 slipped 0.76%; and Hong Kong’s Hang Seng exchange dropped 2%.

In Europe markets finished lower, as Britain’s FTSE-100 slipped 0.67%, while France’s CAC-40 dropped 0.46% and Germany’s DAX fell 0.43%.

Crude oil futures dropped 1.14% at $40.73 per barrel, Brent crude edged down 0.21% at $43.28. Gold futures fell 1.05%.

The yield on the 10-year Treasury dropped 2.86% to 0.612% while yield on the 30-year Treasury fell 2.25% to 1.301%.