By Dan Strumpf
U.S. stocks extended their losses into the afternoon, as mixed
economic data fueled a selloff in technology and small-company
shares that until recently had been strong performers.
The Dow Jones Industrial Average fell 246 points, or 1.4%, to
17784. The S&P 500 index dropped 29 points, or 1.4%, to 2078.
The Nasdaq Composite Index shed 100 points, or 2%, to 4923.
The losses deepened ahead of the close of trading, with
biotechnology stocks and shares of small companies leading the
declines. Those have been among the market's biggest gainers in
recent months, but have reversed course in the last several
sessions.
"The market [is] punishing all the crowded trades at once," said
Michael Antonelli, an equity sales trader at Robert W. Baird in
Milwaukee.
The Nasdaq Biotechnology Index fell 4%. The Russell 2000 index
of small-capitalization stocks shed 2.2%.
Stocks kicked off the session lower following a flurry of data
that underscored a recent downshift in the U.S. economy. While
weekly jobless claims fell to the lowest level in 15 years, a
report on consumer spending showed a smaller-than-expected pickup
in March, while inflation undershot the Federal Reserve's 2% target
for the 35th month in a row. The data came one day after the
Commerce Department reported the U.S. economy grew just 0.2% during
the first three months of the year, well below expectations.
"People are still kind of smarting from the GDP number," said
Ted Weisberg, a trader at Seaport Securities. "You can wrap any
excuse around bad economic numbers, but at the end of the day
they're just excuses."
Information technology stocks posted some of the biggest losses
Thursday as shares of Apple Inc. sank 2.7%. The pullback follows a
report in The Wall Street Journal that a key component of the Apple
Watch made by one of two suppliers was found to be defective. The
broader S&P 500 Information Technology index lost 1.6%.
Thursday's decline is the second straight loss for stocks, but
both the S&P 500 and the Nasdaq Composite remain close to
all-time highs reached just last week. On Wednesday, the Dow
slipped 0.4%.
European stocks rebounded from Wednesday's steep losses.
Germany's DAX added 0.2%, while France's CAC 40 gained 0.1%.
For months, investors have been calling for a pickup in
spending, as consumers benefit from lower oil prices. While oil
prices have rebounded in recent weeks, they still remain down about
45% from last June. Increased spending could boost corporate
revenues, and in turn, profits.
"What's been interesting is the buildup in the savings rate over
the last couple of months and the fact that consumers have not yet
begun to spend that supposed windfall from gasoline prices coming
down," said Ben Pace, chief investment officer of HPM Partners,
which manages $6 billion. He said he continued to favor consumer
discretionary stocks as he expects spending to eventually increase,
also driven by improvement in the labor market.
Crude-oil futures on Thursday rose 1.8% to $59.63 a barrel,
their highest settlement since Dec.11. Gold futures fell 2.3% to
$1182.40 an ounce.
The yield on the 10-year Treasury note rose to 2.096% from
2.035% on Wednesday. Yields rise as prices fall.
Exxon Mobil Corp., the biggest U.S. oil company, posted sharp
declines in profit and revenue in the first quarter as it contended
with a slump in oil prices. Shares fell 0.5%.
Shares of Viacom Inc. fell 4.1% after the media company said it
swung to a loss in its March quarter and took a hefty charge to
restructure its business.
Time Warner Cable Inc. posted disappointing profit and revenue
for the first quarter. Shares fell 1.5%.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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