The major domestic equity indexes chalked red ink on Thursday as energy shares fell along with oil prices. The energy index was down the most among the major S&P sectors, falling 1.71% and extending its recent slide. Domestic oil prices slid more than 2 percent on fears of oversupply.
Powell’s comments on Wednesday that a decline in inflation this year could be due to transitory factors dampened some investors’ hopes that the Fed would move later this year to cut interest rates. The S&P 500’s recent run to record highs also may be giving investors reasons to pause.
The index has rallied more than 16 percent this year and is entering a period of the year traditionally known as being difficult for equities over the next six months.
With the first-quarter earnings season winding down, investors are looking for fresh catalysts such as U.S.-China trade developments and economic data.
Markets also are waiting for a reading of the Labor Department’s non-farm payrolls data on Friday that is expected to show fewer job additions last month compared with March.
More than 350 of the S&P 500 companies have reported their results so far on the first quarter. The consensus now is for earnings to have risen 0.7%, compared with the 2% fall estimated at the beginning of April, according to IBES data from Refinitiv data.
Among gainers, Qualcomm Inc rose 0.9% after analysts said the chipmaker was well positioned in the 5G networks space even as it forecast disappointing current-quarter sales.
The Philadelphia Semiconductor index gained 1.1%.
Among decliners, Dow Inc, the commodity chemicals division spun off from DowDuPont Inc, fell 6.1% after reporting a fall in core earnings.
Kellogg was down about about 3.4% after the company said it would replace its chief financial officer and reported a decline in first-quarter earnings.
Meanwhile, shares of vegan burger maker Beyond Meat Inc ended up 163% in their market debut Thursday.
Approximately 7.31 billion shares changed hands on the major domestic equity exchanges, as compared to the 6.61 billion share average over the past 20 trading days.
Worker productivity increased at its fastest pace in more than four years in the first quarter, depressing labor costs and suggesting inflation could remain benign for a while.
The report from the Labor Department on Thursday came on the heels of data this week showing moderate wage growth in the first quarter and a key inflation measure posting its smallest annual gain in 14 months in March.
Nonfarm productivity, which measures hourly output per worker, increased at a 3.6 percent annualized rate in the last quarter. That was the strongest pace since the third quarter of 2014. Data for the fourth quarter was revised down to show productivity rising at a pace of 1.3 percent instead of the previously reported 1.9 percent rate.
The acceleration in productivity was flagged by a sharp rise in gross domestic product growth in the January-March period. The economy grew at a 3.2 percent rate in the first three months of the year after expanding at a 2.2 percent pace in the fourth quarter.
The trend in productivity is improving. Compared to the first quarter of 2018, productivity increased at a rate of 2.4 percent, the best performance since the third quarter of 2010.
The strong pace of productivity also suppressed growth in labor costs, a potential boost to corporate profits.
Unit labor costs, the price of labor per single unit of output, fell at a 0.9 percent rate in the first quarter after increasing at a 2.5 percent rate in the prior quarter. Compared to the first quarter of 2018, labor costs grew at a 0.1 percent rate, the weakest pace since the fourth quarter of 2013.
Hourly compensation increased at a 2.6 percent rate, slowing from the fourth quarter’s brisk 3.9 percent pace. Hourly compensation increased at a 2.5 percent rate compared to the first quarter of 2018.
Unemployment Claims Flat
The Labor Department indicated on Thursday that initial claims for state unemployment benefits were flat at a seasonally adjusted 230,000 claims for the week ended April 27. Claims were up by 37,000 claims in the prior week, which was the largest rise since September 2017.
Claims have been volatile in recent weeks because of the different timings of the Easter and Passover holidays as well as school spring breaks. A strike by workers at Stop & Shop supermarkets in New England, which has since ended, likely contributed to the recent jump in claims.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose by 6,500 claims to 212,500 claims last week. Despite the recent increase in claims, the labor market remains strong, with Friday’s employment report for April expected to show another month of solid job growth.