(Fixes typo in the first paragraph.)
(Reuters) -Wall Street dipped on Thursday after weekly jobless claims fell to a near 18-month low, allaying fears of a slowing economic recovery, but also stoking worries the Fed could move sooner than previously expected to scale back its accommodative policies.
The Labor Department said initial claims for state unemployment benefits dropped 35,000 to a seasonally adjusted 310,000 for the week ended Sept. 4, the lowest level since mid-March 2020. That suggested that job growth could be hindered by labor shortages rather than cooling demand for workers.
The S&P 500 real estate and healthcare indexes both fell more than 1%, while financials and materials made modest gains.
JPMorgan, Wells Fargo, Citi Group and Morgan Stanley each added about 0.5%, tracking a slight rise in benchmark bond yields following the claims data. [US/]
“The problem with the market these days is it’s rotating more than it’s moving. Today, because of the jobs claims report, everyone is buying cyclical stocks,” said Jay Hatfield, chief executive of Infrastructure Capital Management in New York. “We see it as a rangebound market, between 4,400 and 4,600 (on the S&P 500).”
Investors have become more worried in recent sessions after a recent monthly jobs report showed a slowdown in U.S. hiring, suggesting the economic recovery may be losing steam faster than expected. Also dragging on sentiment has been uncertainty about when the U.S. Federal Reserve’s will scale back massive measures enacted last year to shield the economy from the coronavirus pandemic.
In afternoon trading, the Dow Jones Industrial Average was down 0.39% at 34,894.03 points, while the S&P 500 lost 0.33% to 4,499.38.
The Nasdaq Composite slid 0.03% to 15,282.36.
Lululemon Athletica soared 11% after providing a strong annual forecast, with demand for its yoga pants remains strong despite the easing of coronavirus restrictions.
Reports that Beijing slowed down approval for all new online video games sent shares of U.S.-listed gaming stocks Activision Blizzard Inc, Electronic Art Inc, and Take-Two Interactive Software Inc down between 1% and 3%.
Data center REIT Digital Realty slid 4.3% to be the top decliner among real estate stocks after the company announced a public offering of 6.25 million shares.
The S&P 500 posted 27 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 63 new highs and 31 new lows.
Reporting by Noel Randewich; Additional reporting by Shashank Nayar in Bengaluru; Editing by Anil D’Silva, Arun Koyyur and Aurora Ellis