Stocks were falling Thursday after jobless claims in the U.S. rose unexpectedly for the first time since March and tech stocks slumped.
The Dow Jones Industrial Average fell 374 points, or 1.39%, to 26,631, the S&P 500 was off 1.29% and the Nasdaq fell 2.3%.
Among particularly prominent tech companies falling were Moderna (MRNA) – Get Report, down 10%, Citrix Systems (CTXS) – Get Report, down nearly 11%, Microsoft MSFT, down 4.1%, Advanced Micro Devices (AMD) – Get Report, down 3.9%, and Apple (AAPL) – Get Report down 4.5%.
The Labor Department said Thursday that first-time claims for unemployment benefits rose to 1.416 million in the week ended July 18. Economists had expected claims of about 1.3 million.
U.S. employers retrenched on their efforts to reopen and rehire amid renewed coronavirus flareups in various states and cities.
“The rising unemployment claims is a deeply concerning sign as the $600 weekly unemployment benefits soon expire for tens of millions of unemployed Americans,” said Glassdoor senior economist Daniel Zhao.
“The combined effect of rising layoffs, expiring unemployment benefits and escalating coronavirus outbreaks sets up a perfect economic storm that could easily derail the weakening economy’s fledgling recovery.”
Tesla (TSLA) – Get Report fell 5.5% to $1,504.52. The electric-car maker topped earnings and revenue estimates for the second quarter and said it could exceed 500,000 deliveries this year despite production disruptions from the coronavirus pandemic.
Investors also are weighing the possibility of more government stimulus against a rise in tensions between the U.S. and China.
Beijing called Washington’s order to close its consulate in Houston an “unprecedented escalation” by the U.S., and reports said Beijing was considering shutting the U.S. consulate in either Wuhan or Chengdu in retaliation.
“The escalation in U.S.-China tensions is a reminder of the headline risk faced by investors during the upcoming U.S. election campaign,” said Stephen Innes, AxiCorp’s chief global market strategist.
“The U.S. and China have become increasingly combative in their views this year. The markets better get used to it because there is more of that to come.”
Meanwhile, Senate Republicans have ironed out their differences with the White House on a fifth coronavirus relief package, The Wall Street Journal reported.
Negotiations with Democrats will begin just days before a $600 weekly supplement to unemployment benefits expires on July 31.
Treasury Secretary Steven Mnuchin said Thursday a payroll tax cut won’t be part of the aid bill.