After a brief bout of bargain hunting during the previous session, caution returned to Wall Street on Thursday. Ahead of a three-day holiday weekend, the major averages all finished in the red.
The Nasdaq and S&P 500 posted notable losses, as investors revealed renewed skepticism about growth sectors. Trading also took place amid a surge in yields.
The Dow held in positive territory for much of the day, bolstered by strength in Nike and Caterpillar, which both benefited from positive analyst commentary. However, a late-day slide left the Dow with slight losses at the close.
The Nasdaq (COMP.IND) led the retreat, ending -2.1%. The S&P (SP500) was -1.2% and the Dow (DJI) finished -0.3%.
Looking at the day’s closing numbers, the Nasdaq dropped 292.51 points to finish at 13,351.08. The S&P 500 slipped 54.00 points to 4,392.59. The Dow trading concluded at 34,451.23, a retreat of 113.36 on the day.
Nine of the 11 S&P sectors finished in the red. Info Tech led the retreat, falling by almost 2.5%. Communication Services and Consumer Discretionary also showed notable declines, each falling by at least 1.5%. Financials lost ground as well, following a wave of bank earnings during the morning.
The 10-year Treasury yield jumped 14 basis points to 2.83% and the 2-year gained 11 basis points to reach 2.46% amid thin holiday trading. The bond market is also closed early at 2 pm ET.
Traders were mostly looking to flatten out positions ahead of the long weekend and technical longs were also forced out, Bloomberg reported.
Elon Musk captured the premarket spotlight with his hostile bid for Twitter at $54.20 in cash. Twitter shares ended lower at -1.7% after spiking 18% right after the filing came out, perhaps indicating skepticism on Wall Street on whether Musk really want to follow through and pay $43B out of his own pocket.
“Twitter faces many challenges that Musk is unlikely to fix,” David Trainer, CEO of investment research firm New Constructs, said. « At this point anyone, who wants to use Twitter already uses Twitter and the company is unlikely to see a significant expansion in its user base. »
« There is also plenty of competition in the social media space with new platforms emerging every few years, » he added.
The deal overshadowed the deluge of big bank earnings, where investors looked mostly pleased with Goldman, Morgan Stanley and Citi, especially with trading revenue. Wells Fargo, more tied to the consumer, was the exception, falling on a top-line miss and trouble with noninterest income.
In economic news, March retail sales rose 0.5%, a little less than expected, while the control group that goes into GDP fell 0.1%.
« We’re a bit disappointed by the March numbers, but note that the net revision was a hefty +0.7%, » Pantheon Macro said. « Moreover, all the shortfall against our more bullish forecasts is in the internet component, where sales dropped by 6.4%. This component has been wild in recent months; down 11% in December, up 21% in January, then down in February and March. »
Elsewhere, April Michigan consumer sentiment handily topped forecasts with a jump in the expectations component. Inflation expectations are at 5.4%, though.
Among active stocks, Nike was a highlight of the S&P leaderboard with some positive analyst commentary. State Street was a notable decliner after earnings.