The major domestic equity indexes once again closed out the day in negative territory on Thursday, with the Dow slumping for an eighth straight decline as industrials wobbled on trade war concerns. Meanwhile, Amazon and other online retailers turned south after a Supreme Court ruling on state sales tax collection.
Some of the nation’s major manufacturers, including those for automobiles, were under pressure after Germany’s Daimler cut its 2018 profit forecast and BMW said it was looking at “strategic options” because of a trade war between the United States and China.
Caterpillar lost 2.52 percent and Boeing fell 1.5 percent, with the S&P industrials off 1.19 percent and on track for their seventh fall in eight sessions.
Amazon fell as much as 1.9 percent after the court ruling, which allows states to force online retailers to collect sales taxes, before paring losses to trade down 1.1 percent. Wayfair lost 1.6 percent, Overstock was down 7.2 percent, Etsy declined 1.4 percent and Ebay fell 3.2 percent.
Intel also weighed heavily on the S&P 500, down 2.4 percent after Chief Executive Officer Brian Krzanich resigned following a probe that revealed a past consensual relationship with an employee violated company policy.
The Dow index is heavily affected by industrial companies, and trade concerns pushed it into negative territory for the year earlier this week, with the index on pace for its eighth straight decline.
Ford fell 1.35 percent, General Motors was down 1.98 percent, while Tesla fell 4.06 percent. The S&P 500 automobiles and components index fell 1.79 percent.
Energy was the worst-performing sector, down 1.93 percent as oil prices fell ahead of the upcoming OPEC meeting where producers are expected to raise output.
Earnings were a bright spot, with shares of Darden Restaurants rising 14.79 percent and Kroger up 9.74 percent after both companies issued strong quarterly results.
Approximately 6.87 billion shares changed hands on the major domestic equity exchanges, as compared to the 7 billion daily average over the last 20 sessions.
Unemployment Claims Decrease
The number of Americans filing for unemployment benefits fell unexpectedly last week, pointing to a further tightening in labor market conditions. According to a report released by the Labor Department on Thursday, initial claims for state unemployment benefits decreased by 3,000 claims to a seasonally adjusted 218,000 claims for the week ended June 16. Claims have now declined for four straight weeks.
The labor market is viewed as being near or at full employment, with the jobless rate at an 18-year low of 3.8 percent. The unemployment rate has dropped by three-tenths of a percentage point this year and is near the Fed’s forecast of 3.6 percent by the end of this year.
The Labor Department said claims for Maine were estimated last week. The four-week moving average of initial claims, viewed as a better measure of labor market trends as it irons out week-to-week volatility, dropped 4,000 to 221,000 last week.
The claims data covered the survey period for the nonfarm payrolls component of June’s employment report. The four-week average of claims rose 7,500 between the May and June survey weeks, suggesting some moderation in job growth this month. Nonfarm payrolls increased by 223,000 jobs in May.
Employers are increasingly reporting labor shortages across all sectors of the economy, with record 6.7 million job openings in April. The number of unemployed people per vacancy slipped to 0.9 from 1.0 in March, meaning that most people looking for a job are likely to find one.
Look for the worker shortage to soon spur faster wage growth and boost inflation. The Fed last week raised interest rates for a second time this year and forecast two more rate hikes by the end of 2018. The Fed described the labor market as “strong.”
The claims report also showed the number of people receiving benefits after an initial week of aid increased 22,000 to 1.72 million in the week ended June 9. The four-week moving average of the so-called continuing claims slipped 4,750 to 1.72 million, the lowest level since December 1973.
Other Economic News
Other data on Thursday showed a moderation in factory activity in the mid-Atlantic region in June amid a decline in new orders. Firms, however, continued to report overall increases in employment this month.
The Philadelphia Fed said its business conditions index fell to a reading of 19.9 in June, the lowest level since November 2016, from 34.4 in May. The survey’s new orders sub-index tumbled nearly 23 points this month. Firms also reported that order backlogs were diminishing.
A measure of factor employment in the mid-Atlantic region edged up to a reading of 30.4 this month from 30.2 in May. But manufacturers reduced hours for employees, with the average workweek index decreasing 10 points.