A selloff in financials and tech stocks on Thursday dragged Wall Street lower and put an end to a record-breaking streak for the Nasdaq.
The S&P 500 was down 0.22% and the Dow Jones Industrial Average fell 0.32%.
The Nasdaq fell 0.29%, backing away from a run that saw the index close at records for five consecutive trading days. The tech-heavy index has risen more than 2% since the beginning of the year.
Financials stocks were hit hard ahead of earnings reports from big banks on Friday. JPMorgan (JPM) , Bank of America (BAC) and Wells Fargo (WFC) will release quarterly performances on Friday morning, heralding the kickoff to the fourth-quarter reporting season. The Financial Select Sector SPDR ETF (XLF) tumbled 0.81%.
Average earnings for the S&P 500 in the fourth quarter are expected to increase 6.1% from the same period a year earlier, according to Thomson Reuters. Earnings growth would mark the second straight quarter of gains after the third quarter broke an earnings recession that lasted for four consecutive quarters. The third quarter also ended a revenue recession that had lasted since the fourth quarter of 2014.
"Reasons for optimism include a favorable pre-announcement ratio and the return of earnings growth to the energy sector," wrote John Canally, chief economic strategist, and Ryan Detrick, senior market strategist, for LPL Financial in a note. "With energy being a big reason for the earnings recession, it will be a major tailwind for the group to finally show some growth. Uncertainty this earnings season circles around a strong U.S. dollar, suggesting a modest drag to earnings."
Tech stocks were the worst performers Thursday. Major tech companies including Microsoft (MSFT) , Nvidia (NVDA) , Intel (INTC) and Oracle (ORCL) moved lower, while the Technology SPDR ETF (XLK) fell 0.20%.
Biotech stocks were also under pressure for the second day in a row. The industry had a tumultuous Wednesday after President-elect Donald Trump suggested he would aggressively negotiate the prices the U.S. paid for drugs, arguing that pharmaceutical companies have been "getting away with murder."
Crude oil moved higher on Thursday on renewed confidence Organization of Petroleum Exporting Countries would adhere to a production cut agreement that went into effect at the beginning of the year. OPEC's Secretary General Mohammed Barkindo said in a speech at the Atlantic Council's Global Energy Forum in Abu Dhabi that he remains "very confident with what I have seen in the last several months" and that members' level of commitment is "unparalleled."
West Texas Intermediate crude was up 1.5% to $53.01 a barrel on Thursday.
Jobless claims rose in the first week of the new year, though remained near multi-year lows. The number of new claims for unemployment benefits increased by 10,000 to 247,000 in the past week. The less-volatile, four-week claims average fell 1,750 to 256,000.
U.S. import prices climbed in December as the cost of oil increased, capping off their biggest yearly gain since 2012. Import prices increased 0.4% in December, but fell 0.2% when excluding fuel prices. Export prices increased 0.3%.
The U.S. economy will likely remain in a low interest-rate environment for some time, St. Louis Federal Reserve President James Bullard told CNBC on Thursday. Bullard, who is not a voting member of the Federal Open Market Committee this year, anticipates just one interest rate increase in 2017, lower than the Fed's anticipated three hikes. In a speech in the afternoon, Bullard added that the Fed could reduce its balance sheet as a means of tightening monetary policy, rather than relying on rate hikes.
A more hawkish Fed member, Patrick Harker of the Philadelphia Fed, said Thursday he anticipates three rate hikes from the central bank this year if the economy continues to improve as expected. Harker said the U.S. economy had begun 2017 on good footing.
Fiat Chrysler (FCAU) slumped 10% after the Environmental Protection Agency lobbed accusations of using software that spewed excessive diesel emissions. The software reportedly affected 100,000 vehicles. Fiat said that it intends to work with regulators and has already proposed a number of solutions.
Walt Disney (DIS) was downgraded to sell from hold at Pivotal Research Group with its price target cut to $85 from $102. Analyst Brian Weiser told CNBC that markets are not accounting for political risks that could hurt a range of companies, adding that "uncertainty should be considered a bad thing."
Hess (HES) was one of the worst performers on the S&P 500 following production guidance for 2017. The oil company upped its exploration and production capital expenditure budget by more than 18% to $2.25 billion for 2017. Production is targeted to rise by 8% to 12% for the full year. Hess was down 5%.
RBC Capital rated Boeing (BA) as underperform with a $136 price target on Thursday. The firm pointed to eroding profit margins in its commercial airplane units. Analysts also said potential protectionist policies from a Trump administration could also prove a headwind to the industry. Boeing fell 0.70%.
Delta Air Lines (DAL) reported better-than-expected revenue over its fourth quarter. Total revenue of $9.46 billion came in above estimates of $9.4 billion, while a decline in passenger unit revenue of 2.7% bested Delta's own guidance of a 3% to 5% drop. The airline anticipates passenger unit revenue to come in flat to up 2% over its first quarter.
JetBlue (JBLU) was down 4% after reporting positive traffic trends for December. Total traffic increased 4.5% last month to 3.97 billion revenue passenger miles. Capacity rose 3.1% to 4.72 billion available seat miles. Revenue per available seat mile declined by 1.5%.