Stocks close lower, falling below recent record highs

·3 min read

TOKYO — Stocks closed lower Thursday, pulling major indexes a bit further below the record highs they marked at the start of the week. Investors continue to be focused on where the economy is headed as the pandemic wanes, and also on the latest company earnings reports. The S&P 500 index fell 0.3%. Technology and communications stocks were the biggest weights on the market. Banks, which have been reporting mostly solid financial results, also fell as bond yields headed lower. Investors also got a report from the Labor Department showing that jobless claims fell to another pandemic low.

THIS IS A BREAKING NEWS UPDATE. AP's earlier story appears below.

Stocks fell Thursday, pulling major indexes a bit further below the record highs they marked at the beginning of the week. Investors continue to be focused on where the economy is headed as the pandemic wanes and also on the latest company earnings reports.

The S&P 500 index fell 0.6% as of 2:09 p.m. Eastern. The Dow Jones Industrial Average gave up an early gain, dropping 58 points, or 0.2%, to 34,873. The Nasdaq composite was down 1.1%. The S&P 500 is now down 0.5% for the week, while the the Nasdaq is down 1.5%.

Technology and communications stocks fell and were the biggest weight on the market. Banks, which have been reporting mostly solid financial results, fell as bond yields moved lower. That includes the 10-year Treasury note, a benchmark for interest rates on consumer loans. Lower interest rates make mortgages and other loans less profitable for banks.

The yield on the 10-year Treasury note fell to 1.30% from 1.35% the day before.

More companies are reporting their latest quarterly earnings. Progressive fell 2.7% after the insurance company’s results fell far short of analysts’ forecasts. Morgan Stanley dropped 0.7% despite reporting a 10% rise in quarterly profits from a year earlier.

A larger bulk of companies will start reporting next week, when earnings season gets into full swing.

American International Group, better known as AIG, rose 2.9% after the insurance company reached a deal with Blackstone Group to help manage some of its life insurance assets.

Investors are also trying to determine how the economic recovery will play out for the rest of the year as the world tries to get back to normal with COVID-19 waning, but still lingering.

“There’s a big question mark around COVID-19 shifting from an acute to a chronic condition for the global market,” said Rod von Lipsey, managing director at UBS Private Wealth Management.

While the virus and its variants aren't likely to severely disrupt the economic recovery, expectations for a quick snapback have been stymied by persistent mutations, he said.

Traders also kept an eye on Washington, as Federal Reserve Chair Jerome Powell delivered his second day of testimony before Congress. Powell reiterated that signs of inflation should ease or reverse over time, while acknowledging that the U.S. is in the midst of an unparalleled economic reopening on the heels of a pandemic-induced recession.

Investors also got a report from the Labor Department showed that unemployment claims fell by 26,000 last week to 360,000, the lowest level since the pandemic struck last year.

Damian J. Troise And Alex Veiga, The Associated Press

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