Stocks fell Thursday, led by heavy selling in tech stocks as well as cyclical value, as jobless data continued to be bleak.
The S&P 500 fell as much as 1%, with the tech-heavy Nasdaq down 0.55%, as cyclical stocks were beaten up worse than tech was. Another risk-off signal, the 10-Year Treasury yield fell to 0.55%, its lowest point since early March.
Investors had rushed into tech stocks that they hoped could elude economic turbulence in June and early July, but tech is now selling off, largely independent of the economic headwinds. FANG stocks fell, some more than 1%, as still-high valuations into earnings pose risks. And not all accelerated growth trends resulting from the at-home environment are guaranteed to be sustainable. Many tech companies have seen their share prices fall considerably after earnings. Apple (AAPL) - Get Apple Inc. (AAPL) Report, Amazon (AMZN) - Get Amazon.com, Inc. Report and Google (GOOGL) - Get Alphabet Inc. Class A Report all report Thursday.
As for cyclical value stocks, oil, banks, consumer discretionary, industrials and materials all fell, with oil and banking down more than 3%. Jobless claims for the past week were 1.4 million versus economists' estimates of 1.5 million. The job market has been stalling of late, with jobless claims at more than 1 million per week for over a month now. The spread of the virus, paused state reopenings, interest rates that can’t fall further, and fiscal stimulus that hasn’t yet kicked in are all headwinds to a V-shaped recovery.
"Initial jobless claims have stubbornly refused to go lower lately, a different story than much of the other improving economic data,” wrote Ryan Detrick, Chief Investment Strategist for LPL Financial, in emailed remarks to reporters. "Jobs are a key part to this recovery and this shows yet again how bumpy the recovery is going to be.”
Qualcomm (QCOM) - Get QUALCOMM Incorporated Report reported a considerable beat of revenue and earnings Wednesday after the bell and the stock rose 10% to $102 a share Thursday. Qualcomm said it expects 5G sales volumes to come in near the higher end of its guidance range, at about 225 million for the year. Semiconductors have shown strength of late, as some growth segments like data center and 5G are flying high, while others like gaming aren’t exactly disappointing. The iShares PHLX Semiconductor ETF (SOXX) - Get iShares PHLX Semiconductor ETF Report rose 0.5%.