All three major US stock indexes followed their European counterparts slightly lower, setting course to snap their three-session winning streaks, while mounting concerns over oil supply arising from a potential US-Iran conflict helped bolster crude prices.
“Today (investors are) weighing some of the economic data and what Walmart’s earnings are saying in terms of the consumer,” says Chuck Carlson, CEO at Horizon Investment Services in Hammond, Indiana.
“I think investors are trying to grapple with trying to make a decision whether this rotation trade has legs or if it’s starting to run its course,” Carlson added, referring to the transition away from mega-cap tech-related momentum stocks.
A spate of economic data showed a dip in jobless claims and US trade data, which recorded its widest goods deficit on record as imports rebounded despite President Donald Trump’s tariffs.
The Dow Jones Industrial Average fell 341.92 points, or 0.69%, to 49,320.74, the S&P 500 fell 32.23 points, or 0.47%, to 6,848.95 and the Nasdaq Composite fell 118.06 points, or 0.52%, to 22,635.31.
European shares pulled back from Wednesday’s record closing high as investors parsed a mixed bag of corporate earnings, particularly Airbus and iron ore producer Rio Tinto.
MSCI’s gauge of stocks across the globe fell 3.95 points, or 0.38%, to 1,045.74.
The pan-European STOXX 600 index fell 0.53%, while Europe’s broad FTSEurofirst 300 index fell 13.81 points, or 0.55%.
Emerging market stocks fell 0.28 points, or 0.02%, to 1,560.60. MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 0.28%, to 799.85, while Japan’s Nikkei rose 323.99 points, or 0.57%, to 57,467.83.
Crude prices continued to rise, reaching a six-month high due to supply concerns arising from the growing possibility of a potential military conflict between the United States and Iran.
“It’s the elephant in the room, what’s going on in the Middle East,” Carlson said. “It certainly has ramifications for commodities, specifically oil and also gold.”
US crude CLc1 rose 1.90% to settle at US$66.43 per barrel, while Brent LCOc1 settled at US$71.66 per barrel, up 1.86% on the day.
The dollar edged higher as solid jobless claims data and minutes from the US Federal Reserve appeared to show a divide among policymakers regarding the need to cut interest rates in the near term.
“The jobs market is okay, but there’s still a bit of job insecurity that’s out there,” Carlson added. “It gives the Fed a pause, trying to evaluate not just the numbers, but how job insecurity is affecting the rest of the economy.”
The dollar index which measures the greenback against a basket of currencies including the yen and the euro, rose 0.18% to 97.88, with the euro down 0.12% at US$1.1768.
Against the Japanese yen, the dollar strengthened 0.08% to 154.95.
In cryptocurrencies, bitcoin gained 0.83% to US$66,877.47. Ethereum declined 0.28% to US$1,936.35.
US Treasury yields were mixed following Treasury Department’s US$9 billion auction of 30-year debt.
The yield on benchmark US 10-year notes fell 1 basis point to 4.071%, from 4.081% late on Wednesday.
The 30-year bond yield fell 0.4 basis points to 4.703% from 4.707% late on Wednesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.4 basis points to 3.464%, from 3.46% late on Wednesday.
Gold prices pared earlier gains and were last essentially unchanged as investors weighed mounting US-Iran tensions against data hinting at labor market stability.
Spot gold rose 0.17% to US$4,987.63 an ounce. US gold futures GCc1 fell 0.04% to US$4,984.50 an ounce.