The recent decline in the shares of technology companies deteriorated further on Thursday, dragging down the major domestic equity indexes, as Wall Street worried over the economy’s health after the Federal Reserve lifted interest rates.

The S&P technology sector fell 0.5 percent, continuing a slide that began last Friday. The sector cut steeper losses from earlier in the session, as did the benchmark S&P 500.

Apple ended the day down 0.6 percent while Google parent Alphabet fell 0.8 percent, due in part to two bearish reports by Street analysts.

The consumer discretionary sector fell 0.5 percent, as Amazon’s shares fell 1.3 percent. Nike fell 3.2 percent after the company said it would cut about 2 percent of its global workforce and eliminate a quarter of its shoe styles.

Technology is still the best-performing sector this year, and consumer discretionary have been among the sectors that have fueled the S&P 500’s 8.6-percent rally in 2017.

Financials and energy, sectors that should thrive during economic expansions, also sold off. Financials slipped 0.4 percent and energy fell 0.7 percent.

Utilities and real estate, which are high-dividend paying groups known as “bond proxies”, gained 0.6 percent and 0.5 percent, respectively, making them the best performing sectors along with the 0.6 percent rise for industrials.

Long-dated Treasury bond yields hit their lowest since early November on Wednesday after surprisingly weak data on inflation and retail sales overshadowed the Fed’s interest rate hike.

Following that disappointing economic data, a report on Thursday showed the number of Americans filing for unemployment benefits fell more than expected last week, pointing to shrinking labor market slack that could allow the Fed to raise interest rates again this year despite moderate inflation growth.

In other corporate news, Kroger closed down 18.9 percent after the supermarket chain slashed its full-year profit forecast.

Approximately 6.5 billion shares changed hands on the major domestic equity exchanges, a number that was below the nearly 6.8 billion share daily average over the last 20 sessions.

Factory Output Falls

Factory output fell unexpectedly in May on a broad decline in production, including the manufacturing of cars, casting a shadow over the economy’s rebound from sluggishness at the start of the year.

The Federal Reserve indicated on Thursday that manufacturing production fell 0.4 percent last month, the second decline in three months. After downward revisions to data for prior months, factory output was lower in May than it was in February.

Output fell across manufacturing industries, with motor vehicles and parts production dropping 2 percent and output for fabricated metal products down 0.7 percent. If not for a 1.1 percent surge in chemicals output, manufacturing would have fallen more.

Overall industrial production was flat last month, with a 1.6 percent increase in mining and a 0.4 percent gain in utilities countering the factory weakness.

Manufacturing, which accounts for about 12 percent of the U.S. economy, had been regaining ground as the prolonged drag from lower oil prices, a strong dollar and an inventory overhang faded.

However, last month, manufacturing capacity utilization, which measures how fully factories are deploying their resources, fell 0.3 percentage point to 75.5 percent.

Overall industrial capacity utilization fell 0.1 percentage point to 76.6 percent.

Labor Market Tightens

The number of Americans filing for unemployment benefits fell more than expected last week, pointing to a shrinking labor market that could force the Federal Reserve to raise interest rates again this year despite moderate inflation growth.

Inflation could remain sluggish for a while as other data on Thursday showed import prices recorded their largest drop in 15 months in May. The Fed on Wednesday raised interest rates for the second time this year amid expectations of moderate economic growth and further strengthening in the labor market.

Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 237,000 for the week ended June 10, the Labor Department said on Thursday, better then economists’ expectations for a decline to 242,000.

Claims have now been below 300,000, a threshold associated with a healthy labor market, for 119 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is near full employment, with the jobless rate at a 16-year low of 4.3 percent.

While monthly job growth has slowed, record high job openings suggest that is likely because companies cannot find qualified workers. The number of people still receiving benefits after an initial week of aid increased 6,000 to 1.94 million in the week ended June 3.

The so-called continuing claims have now been below 2 million for nine straight weeks, pointing to diminishing labor market slack.

In another report, the Labor Department said import prices declined 0.3 percent last month as the cost of imported petroleum products tumbled. That was the biggest drop since February 2016 and followed a 0.2 percent increase in April.

In the 12 months through May, import prices rose 2.1 percent, the smallest gain since last December. Import prices rose 3.6 percent year-on-year in April.

The slowdown in import prices suggests domestic inflation could remain soft for a while. Consumer inflation measures have slowed in recent months, retreating below the U.S. central bank’s 2 percent target.

The Fed on Wednesday acknowledged the ebb in price pressures and said it expected annual inflation rates to remain somewhat below 2 percent in the near term but to stabilize around the target over the medium term.

In May, import prices excluding petroleum were unchanged after increasing 0.3 percent in April. They increased 1.0 percent in the 12 months through May.

A third report from the Fed showed manufacturing production fell 0.4 percent last month, weighed down by a 2.0 percent drop in motor vehicle assembly. With auto sales slowing and inventories bloated, motor vehicle production could remain a drag on factory output for a while.

Manufacturing output jumped 1.1 percent in April. It rose 1.4 percent in the 12 months to May, pointing to underlying strength in manufacturing, which accounts for about 12 percent of the U.S. economy.

That was supported by a survey from the New York Fed showing its Empire State current business conditions index surged 21 points to 19.8 in June, the highest reading since September 2014.

While another survey from the Philadelphia Fed showed a measure of business conditions in the mid-Atlantic region fell to a reading of 27.6 this month from 38.8 in May, unfilled orders and delivery times increased.

Crude Prices Fall

Crude oil prices fell sharply and remained under pressure from high global inventories and fears that OPEC’s agreed production cuts cannot offset rising production elsewhere.

The dollar rose to its highest point in more than two weeks, adding to the pressure on oil, because a stronger dollar makes dollardenominated oil more expensive for buyers in other currencies.

Saudi Arabia’s oil exports are expected to fall below 7 million barrels per day this summer and Russian oil exports were broadly flat in the third quarter, yet prices continue to fall.

The market has not been able to sustain a rally since March, as efforts by OPEC and non-OPEC producer Russia to reduce supply have been met with higher output from Nigeria and Libya, who are exempt from the deal, along with the United States.

Brent crude touched a low of $46.70 a barrel on Thursday, weakest since May 5 and just above six-month lows, before recovering to $46.92 a barrel. U.S. crude was down 21 cents at $44.52, after earlier touching a six-month low of $44.32 a barrel.

Crude prices fell nearly 4 percent on Wednesday, after our gasoline inventories rose unexpectedly and the International Energy Agency said it expects supply to outpace demand in 2018 despite consumption hitting 100 million bpd for the first time.

U.S. gasoline inventories rose 2.1 million barrels last week, putting them 9 percent higher than their five-year average for this time of year, according to the U.S. Energy Information Administration (EIA).

Both benchmarks have given up all of the gains made since OPEC agreed to cut output to prop up prices late November.

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