S&P 500, Dow, Nasdaq fall again as economic concerns linger

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Stocks posted modest losses on Thursday, adding to weakness recorded the previous day as investors continued to fret about the health of the economy.

The Nasdaq Composite (COMP.IND) closed -1.0%, the S&P 500 (SP500) ended -0.8% and the Dow (DJI) finished -0.8%.

“Stocks once again failed to maintain upside momentum this week. Investors aren’t fond of the risk/reward at current levels as even rather dovish Fed members like Lael Brainard believe that rates need to remain elevated until inflation comes down meaningfully,” analyst Leo Nelissen told Seeking Alpha.

“The market has become so dovish that any hawkish comments from the Fed or unfavorable inflation numbers can pressure stocks. Today was a good example of that,” he added. “I believe it is highly likely that stocks trade in a prolonged sideways trend somewhere in the low 3,000 and mid-4,000 points range in the S&P 500.”

After weak retail sales and industrial production data prompted selling the day before, the major U.S. equity averages fell again in Thursday’s early going following the release of another round of economic data. Stocks trimmed their losses in the middle of the session but remained solidly lower at the close.

The latest group of economic reports presented a murky picture. Housing starts dropped 1.4% in December, but the annual rate of 1.382M was above the 1.359M pace that economists had predicted. 

Meanwhile, weekly jobless claims unexpectedly fell to 190K, coming in below the 214K that was expected. Low levels of unemployment filings suggest ongoing resilience in the labor market.

Elsewhere, the Philly Fed business outlook came in at -8.9 for January, compared to a prior result of -13.7. Economists were looking for a reading of -11.

On the fixed-income front, rates edged higher following a decline during the previous session. The 10-year Treasury yield (US10Y) climbed 2 basis points to 3.40% and the 2-year yield (US2Y) rose 4 basis points to 4.11%.

Among active stocks, Procter & Gamble (PG) edged lower following its quarterly report. Meanwhile, Netflix (NFLX) is scheduled to announce its financial figures after the closing bell.

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