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Market Snapshot: U.S. stocks end mostly higher but Dow slips for third day with coronavirus delta variant a concern

Technology shares led a bounce for major U.S. stock indexes Thursday, though stocks more sensitive to the economic cycle remained under pressure as worries persisted about the potential impact on economic growth from the spread of the coronavirus delta variant.

The S&P 500 index and the Nasdaq Composite managed to eked out small gains to halt a two day slide, but the Dow Jones Industrial Averaged booked its third straight drop, representing its longest bout of losses since the five-session period ended June 18. 

What are major indexes doing?

The Dow Jones Industrial Average
DJIA,
-0.19%

closed down 66.57 points or 0.19% at 34894.12, after falling 270 points at its session low.

The S&P 500
SPX,
+0.13%

closed up 5.53 points or 0.13% at 4405.80

The tech-heavy Nasdaq Composite
COMP,
+0.11%

advanced 15.87 points or 0.11% to 14541.79.

On Wednesday, U.S. stocks suffered their worst single session in a month. The Dow fell 382 points, the S&P 500 lost 1.1% and the Nasdaq Composite declined 0.9%.

What’s drove the market?

Investors have grown cautious on stocks as concerns about the delta variant of COVID-19 threaten to dent the global economic recovery.

Global investors were rattled by the release of the Fed minutes on Wednesday, even though its message that tapering of the central bank’s bond purchases will likely start this year was well choreographed in speeches by policy makers.

Need to Know: The Fed’s not boring anyone into submission after all. The dollar might be to blame.

Losses for U.S. stocks were limited though as technology shares found support, with the sector closing up 0.99% to lead the S&P 500 into positive territory Thursday, but it was small-cap stocks that saw outsize losses on Thursday. The Russell 2000 Index 
RUT,
-1.22%

of small-cap stocks finished down 1.3%. 

Investors remain upbeat about improving corporate earnings, but are growing concerned about the spread of the coronavirus delta variant and its potential impact on global economic growth at the same as the Fed is talking about tapering its bond buying program.

 “Regardless of Fed tapering timing, growth is only getting pushed further out, but given the excessive froth in the market a pullback seems warranted,” said Edward Moya, Senior Market Analyst for the Americas, at OANDA.  “Wall Street just can’t get beyond COVID jitters.  Today, two fully vaccinated senators tested positive for COVID and Apple closed a store after more than 20 employees were exposed to COVID. ”

Also noteworthy was a U.K. study, from the University of Oxford based on real-world data, that showed diminished effectiveness from coronavirus vaccines to the delta variant. After four to five months, the study found that two doses of the vaccine from Pfizer
PFE,
-1.03%

and BioNTech
BNTX,
-8.84%

was as effective as two Oxford-AstraZeneca
AZN,
-0.42%

jabs.

Economists at Goldman Sachs lowered their third-quarter U.S. growth forecast to 5.5% from 9%, though they raised their expectations for the next four quarters.

“The impact of the delta variant on growth and inflation is proving to be somewhat larger than we expected,” said the Goldman economists, led by David Mericle. Their revised forecast implies 2021 growth of 6% on a full-year basis versus 6.4% previously, and 2022 growth of 4.5% versus 4.4% previously.

Investors were also weighing further improvement in labor-market data though. First-time claims for U.S. unemployment benefits fell more than expected last week to 348,000, a pandemic low. Economists had expected 365,000 initial claims.

The Philadelphia Fed said its manufacturing index fell to 19.4 in August from 21.9 a month earlier.

The Conference Board said its Leading Economic Index rose 0.9% in July, even as the delta variant surged.

Which companies were in focus?

Shares of Robinhood Markets Inc.
HOOD,
-10.26%

closed down 10.3% after the online broker’s cautious outlook on the third quarter. See: Robinhood earnings show a company reliant on quieting retail traders and volatile crypto pricing

Tesla Inc.
TSLA,
-2.25%

shares were down 2.3% ahead of the electric car maker’s artificial intelligence day event later Thursday.

Shares of Macy’s Inc.
M,
+19.59%

soared to finish up 19.6% after the department-store chain delivered results Thursday that beat expectations, raised its guidance and announced a new share repurchase program.

Kohl’s Corp.
KSS,
+7.29%

shares rose 7.3%, after the retailer reported earnings that beat expectations and boosted its full-year guidance.

Shares of Cisco Systems Inc.
CSCO,
+3.84%

were up 3.8%, leading Dow gainers, after the computer-networking company reported fiscal fourth-quarter results slightly above Wall Street estimates.

Nvidia Corp.
NVDA,
+3.98%

shares rose almost 4% after the chip maker’s earnings topped Wall Street estimates and the company addressed how supply constraints in the continuing global chip shortage were reflected in its outlook.

What did other markets do?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.245%

1.4 basis points to 1.248%. Yields fall as bond prices rise.

The ICE U.S. Dollar Index
DXY,
+0.46%
,
a measure of the currency against a basket of six major rivals, rose 0.5% and traded at a nine-month high.

Oil futures were on track to extend a losing streak to six sessions, with the U.S. benchmark
CL00,
-2.33%

down more than 2% at $63.87 a barrel. Gold futures
GC00,
-0.11%

were little changed near $1,783 an ounce.

For equities, the selling was particularly intense in Europe, where miners dived nearly 5% to send the Stoxx Europe 600
SXXP,
-1.51%

and London’s FTSE 100
UKX,
-1.54%

each falling 1.5%.

In Asia, Hong Kong’s Hang Seng Index
HSI,
-2.13%

dropped 2.1%, while the Shanghai Composite
SHCOMP,
-0.57%

shed 0.6% and Japan’s Nikkei 225
NIK,
-1.10%

declined 1.1%.

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