(Reuters) – The S&P 500 edged down in choppy trading on Thursday, with losses in cyclical sectors countering gains in tech shares, as investors took the pulse of the economic rebound and gauged when the Federal Reserve might temper its monetary stimulus.
Tech also supported the Nasdaq, while the Dow industrials moved lower, as economically sensitive sectors such as energy and materials were weak.
Data showed that the number of Americans filing new claims for unemployment benefits fell to a 17-month low last week, pointing to another month of robust job growth.
Stocks had sold off sharply a day earlier, pushing the S&P 500 down 1.8% from its record closing high, after minutes from the Fed’s July meeting showed officials felt it was possible that a key benchmark for decreasing support “could be reached this year.”
The benchmark index traded well lower to start Thursday’s session as well, but recovered to erase most of its declines as it swung between gains and losses.
“Money on the sidelines … was deployed into the market on weakness, and that has been a tale of the markets for the past six to 12 months,” said Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management.
The Dow Jones Industrial Average fell 163.76 points, or 0.47%, to 34,796.93, the S&P 500 lost 4.97 points, or 0.11%, to 4,395.3 and the Nasdaq Composite added 5.88 points, or 0.04%, to 14,531.79.
Technology was the best-performing S&P 500 sector, rising 0.8%, helped by a 3.6% gain for shares of Nvidia Corp. The chip company forecast third-quarter revenue above Wall Street expectations late on Wednesday as it benefits from a boom in demand.
Consumer staples, utilities and healthcare – generally considered defensive sectors – were all higher.
Financials and industrials were among the sectors in the red.
In company news, shares of U.S. department store chains Macy’s Inc and Kohl’s Corp rose 21% and 7.5%, respectively, following increased annual sales forecasts.
A rebound in the U.S. economy including a stellar second-quarter corporate earnings season on top of accommodative monetary policy has underpinned positive sentiment for equities, with the S&P 500 up nearly 100% since its March 2020 pandemic low.
But with the market in a period that has seasonally been weak historically, investors have said stocks may be due for a significant drop, with the S&P 500 yet to experience a 5% pullback this year.
Focus is shifting to the Fed’s annual research conference in Jackson Hole, Wyoming, next week for any read about the central bank’s next steps.
“The key economic variable continues to be inflation,” Mortimer said. “Is it temporary, is it permanent, what number will the Fed tolerate in order to achieve its full employment mandate?”
Declining issues outnumbered advancing ones on the NYSE by a 3.25-to-1 ratio; on Nasdaq, a 2.55-to-1 ratio favored decliners.
The S&P 500 posted 26 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 28 new highs and 223 new lows.
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