By Anora Mahmudova and Carla Mozee, MarketWatch
Employment cost index rises more than expected
NEW YORK (MarketWatch) -- The Dow Jones Industrial Average
dropped triple digits Thursday, as investors weighed the
implications of robust economic growth and signs of rising wage
inflation on Federal Reserve policy.
The main benchmarks were on track to finish the volatile month
mostly lower, first monthly loss in 7 months.
The S&P 500 (SPX) declined 19 points, or 1%, to 1,951.45 and
was on track to record its first monthly loss since January.
The Dow Jones Industrial Average (DJI) dropped 136 points, or
0.8%, to 16,740.51 and was set to finish the month lower. The
Nasdaq Composite (RIXF) lost 52 points, or 1.2%, to 4,410.52 and
looked set to close flat over the month.
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action.
Weekly jobless claims rose slightly less than expected a week
after hitting a 14-year low. However the employment cost index rose
due to a larger-than-expected increase in wages. Many analysts
watch for wage inflation as a precursor to inflation.
Investors will continue to focus on company earnings. Also in
the spotlight is Argentina. Standard & Poor's Ratings Services
declaring the country in selective default after talks aimed at a
settlement between Argentina and holdout creditors fell apart late
Wednesday.
"The markets seem to be digesting a lot of the data from
[Wednesday] along with the Fed statement. Even though there is a
good chance we'll see a revision to what was a surprisingly good Q2
GDP number, this does raise the specter of monetary tightening in
less than a year," said Brenda Kelly, chief market strategist at
IG, in emailed comments.
Corporate news
Among individual stocks, Avon (AVP) said second-quarter profit
fell on lackluster sales, particularly in Latin America and North
America. But the beauty product company's CEO Sheri McCoy said
management expects improved performance in the second half of the
year. Shares rose 4%.
Yum Brands Inc. (YUM) shares skidded 6.2% after the company said
illegal activities involving a Chinese supplier have significantly
hurt sales over the last couple weeks.
After the bell, Tesla Motors (TSLA) will release quarterly
results.
Shares in Synchrony Financial (SYF) fell 1% after a giant
initial public offering was priced at $23, near the low end of
expectations. (Read more about the day's notable movers here:
http://www.marketwatch.com/story/whole-foods-gopro-and-tesla-are-stocks-to-watch-thursday-2014-07-31.)
In the commodities market, crude-oil futures (CLU4) fell below
$100 a barrel on bearish U.S. inventory data, while gold futures
(GCQ4) turned lower.
European stocks fell, and Asian equities closed mixed, with
Japan's Nikkei Average ending down by 0.2%.
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