A higher probability the Federal Reserve could implement another rate hike in June sent shares lower on Thursday.
Stocks were off session lows by mid-afternoon, though remained in the red. The S&P 500 fell 0.65%, the Dow Jones Industrial Average slipped 0.69%, and the Nasdaq slid 0.92%.
The June meeting is definitely a live one for a possible rate hike, New York Fed President William Dudley said at a media briefing in New York. Dudley confirmed that a June or July hike was possible if data confirm the Fed's optimistic economic outlook.
Minutes from the Fed's April meeting released on Wednesday suggested many members would be comfortable raising rates as soon as June, more quickly than even the most hawkish of economists' forecasts. Fed members said a June hike is contingent on a stronger job market and signs inflation is "making progress" toward the central bank's 2% target. A June rate hike now has a 26% probability, according to CME Group.
"As always, payrolls will be key," DBS Bank analysts wrote in a note. "Put them back at 210k or higher in May and it's a 50/50 call come June, assuming everything else stays the same. If everything else strengthens to boot, watch out."
A number of retailers trounced lowered expectations, pulling consumer stocks higher for the session. Walmart (WMT - Get Report) jumped 9% after reporting same-store sales double estimates in its first quarter and a solid forecast for its second quarter. The retailer reported U.S. same-store sales growth of 1% amid a 1.5% increase in traffic. Analysts had expected 0.5% growth in same-store sales. Earnings of 98 cents a share topped estimates by a dime.
Teen retailer American Eagle Outfitters (AEO - Get Report) reported a better-than-expected first quarter as digital traffic drove a 7.1% sales increase. Its namesake brand, which generates the most sales, saw a 4% increase in comparable-store sales.
Urban Outfitters (URBN - Get Report) also bucked the downward trend in retail, reporting a 3% increase in quarterly sales. The revenue increase helped to drive profit higher and expand gross margins. Comparable-retail sales at its Anthropologie brand were flat, while its namesake Urban Outfitters locations reported a 2% increase.
Crude oil stabilized by the end of the session after pulling back from positive momentum earlier in the week. Crude had closed at an October high on Tuesday as supply issues in Nigeria and decreased production in the Alberta region of Canada choked off a supply glut. West Texas Intermediate closed just under the flatline at $48.16 a barrel on Thursday.
The number of new claims for unemployment benefits fell 16,000 to 278,000 in the week ended May 14, according to the Labor Department. The decline was driven by a big drop in claims in the New York region. The less-volatile, four-week claims average rose 7,500 to 275,750.
Business conditions in the Philadelphia region continued to show weakness. The Philadelphia Fed index fell to negative 1.8 in May from a reading of negative 1.6 in April.
Tesla (TSLA - Get Report) fell 1% after filing for a secondary offering sell $2 billion in common stock. The automaker said it was raising money to "accelerate the ramp of Model 3." Around $1.4 billion of the offering will be offered by Tesla and the remainder by CEO Elon Musk.
Cisco (CSCO - Get Report) moved higher after topping analysts' estimates in its recent quarter. The networking-tech company earned an adjusted 57 cents a share, 2 cents above estimates, while issuing better-than-expected current-quarter earnings guidance.
"The company delivered convincing fiscal third quarter (F3Q) results which defied disappointing results from its data-networking peers, a difficult macro backdrop, and weak demand for IT infrastructure," said Jim Cramer and Jack Mohr, co-portfolio managers of Action Alerts PLUS charitable trust.
Salesforce.com (CRM - Get Report) reported a better-than-expected first quarter on its top- and bottom-lines. The cloud computing company earned an adjusted 24 cents a share, a penny above forecasts, while revenue rocketed 27% higher. Salesforce.com said it expects adjusted earnings of between 24 cents and 25 cents a share during the second quarter, in line with analysts' estimates.
Monsanto (MON) confirmed it received a takeover proposal from German chemicals and pharmaceuticals company Bayer (BAYRY) . Monsanto, which last year failed to take over Syngenta in a $40 billion deal, said it "received an unsolicited, non-binding proposal" from Bayer. Monsanto shares were 8% higher in premarket trading and recently rose another 5%.