The US stock market ended lower on Thursday as investors continued to grapple with rising inflation concerns and the prospect of higher interest rates. The Dow Jones Industrial Average fell 23.34 points, or 0.07%, to end at 34,577.57. The S&P 500 lost 15.27 points, or 0.36%, to close at 4,192.85, while the tech-heavy Nasdaq Composite dropped 141.82 points, or 1.03%, to finish at 13,614.51.
Despite the sell-off, market sentiment remained positive, with many analysts suggesting that the recent pullback offered a buying opportunity for investors. However, concerns about inflation and the Fed’s response to it continue to weigh on market sentiment, particularly in sectors that had outperformed during the pandemic.
Energy sector leads declines
The energy sector was the worst-performing sector on Thursday, as crude oil prices fell following reports of a potential agreement between Iran and world powers to lift sanctions on Tehran’s oil exports. Exxon Mobil and Chevron both fell more than 1%, while ConocoPhillips dropped 3.4%. Despite the losses, many analysts remain bullish on the sector, citing the recent rebound in oil prices and strong demand for gasoline as key drivers of future growth.
Meanwhile, the technology sector also saw significant losses, with shares of Apple, Amazon, and Facebook all falling more than 1%. The sell-off came amid growing concerns about rising inflation and the prospect of higher interest rates, which could weigh on the high-growth companies that dominate the tech sector.
Other sectors that underperformed on Thursday included healthcare, utilities, and real estate, while consumer staples, industrials, and financials all ended the day in positive territory.
Bond yields rise
US Treasury yields rose on Thursday, with the benchmark 10-year note hitting its highest level since mid-May. The yield on the 10-year note rose to 1.63%, up from 1.58% on Wednesday. The rise in yields came amid growing concerns about rising inflation and the prospect of higher interest rates, which could weigh on the bond market in the coming months.
Many analysts have been closely watching the bond market in recent weeks, as rising yields could signal a shift in market sentiment and a potential rotation out of growth stocks and into value stocks. However, some investors remain bullish on the bond market, citing the Fed’s commitment to keeping interest rates low for the foreseeable future.
Despite the rise in yields, the US dollar remained relatively stable, with the dollar index trading flat on Thursday.
Economic data mixed
A batch of economic data released on Thursday showed mixed results, with initial jobless claims falling to a pandemic-era low of 444,000, but retail sales for May coming in below expectations. The data provided further evidence of a recovering economy, but also highlighted some of the challenges facing policymakers as they navigate the post-pandemic landscape.
Many analysts are closely watching key economic indicators such as inflation, employment, and consumer spending, as these are key drivers of market sentiment and future growth prospects. However, the data can also be volatile, particularly in the wake of a once-in-a-generation pandemic that has disrupted global supply chains and upended traditional economic models.
Looking ahead, investors will be closely watching the Fed’s upcoming meeting next week for any clues about its future monetary policy stance, as well as key economic data releases such as the Consumer Price Index and the Producer Price Index.