Stocks and index ETFs are slumping on Thursday, as technology companies are once again falling, and investors digest the fresh corporate earnings reports and mixed U.S. economic data.
The Dow Jones Industrial Average slipped or 0.61%, while the S&P 500 fell 0.58% and the Nasdaq Composite declined 1.12% as of 1pm EST.
Stock index ETFs are struggling along with their underlying benchmarks. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are all negative in early afternoon trading Thursday.
“Over the next few weeks the core tech titans are set to report earnings,” said Dan Ives, an analyst at Wedbush. “This will be a pivotal few weeks for investors to gauge how the tech stalwarts business models/trends are holding up in this unprecedented COVID-19 storm and will be a key barometer for overall consumer and enterprise spending trends during this semi-lockdown backdrop.”
Economic data is also stymying market movement, as the weekly jobless claims number was worse than expected. The Labor Department noted that a total of 1.3 million Americans filed for unemployment benefits last week, in contrast with the Dow Jones estimates of 1.25 million first-time filers.
However, retail sales popped 7.5% in June, beating expectations of a 5.2% increase per Dow Jones, building on May’s 17.7% surge, which outperformed projections to be the largest reading on record.
Analysts are still uncertain as to how the recovery will play out, stressing the importance of finding a coronavirus vaccine before meaningful economic progress can be made.
Paul Ashworth, chief U.S. economist at Capital Economics, said the U.S. retail sales data could portend a significant economic rebound in the third quarter. “But with the new wave of infections leading to renewed closures and restriction in some states, we still think the balance of risks to that third-quarter forecast lie to the downside,” he said.
“We are not out of the woods yet and are still far away from returning to pre-Covid-19 economic levels,” said Nate Fischer, chief investment strategist at Strategic Wealth Partners.
“The market is in need of a health-care solution, as the economy was forced to shut down for a health-care issue. So far, we’ve had fiscal and monetary assistance to this problem. Until a real medical remedy is found, the market will remain volatile,” he added.
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