STOCKS on Wall Street ended Thursday’s trading lower as investors cashed out of major technology counters while an unexpected rise in weekly US jobless claims pointed to a fragile recovery in the labour market.
Shares of Apple Inc, Tesla Inc and Facebook Inc weighed the most on both the benchmark S&P 500 and the tech-heavy Nasdaq.
Facebook shares dropped 1.5% to US$269.39 as Wall Street assessed the wider ramifications of its move to block all news content in Australia.
The Dow Jones Industrial Average fell 119.68 points or 0.38% to 31,493.34, the S&P 500 lost 17.36 points or 0.44%, to 3,913.97 and the Nasdaq Composite gave up 100.14 points or 0.72%, to 13,865.36.
Volume on US exchanges totalled 13.13 billion shares.
A Labour Department report showed initial claims for state unemployment benefits rose to 861,000 last week from 848,000 the prior week, partly due to potential claims related to the temporary closure of automobile plants due to a global semiconductor chip shortage.
Strong earnings, progress in the vaccination rollout and hopes of a US$1.9 tril federal stimulus package helped US stock indexes again hit record highs at the start of the week.
But the months-long rally suggests stocks now have high valuations, according to Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.
“We are still in the cautiously bullish environment for the market on the whole,” Pride said, citing two reasons.
“We’re going to get a vaccine-induced economic recovery, that’s No. 1. The flip side of that story is the markets have largely priced that in and driven themselves to over-valued territory. Markets are going to struggle with that,” he added.
Concerns over a rising inflation outlook have pushed investors to book profits on stocks with high valuations in the S&P 500 technology and communications services sectors which have underpinned a 76% rise in the S&P 500 since its March 2020 lows.
Of the 11 major S&P 500 sectors, only utilities and consumer discretionary rose, while real estate barely fell, off 0.02%.
Declining issues outnumbered advancing ones on the NYSE by a 2.30-to-1 ratio; on Nasdaq, a 2.53-to-1 ratio favoured decliners.
The S&P 500 posted 15 new 52-week highs and no new lows; the Nasdaq Composite recorded 104 new highs and 17 new lows. – Feb 19, 2021