Two Headwinds Pressuring Stocks Thursday

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Stocks were pressured Thursday as jobless claims were worse-than-expected and virus cases around the U.S. continued climbing. 

The S&P 500 fell as 0.7%, as all three major U.S. indices fell. The 10-Year Treasury yield fell considerably to 0.66%. Yields fall as prices rise. 

Investors are beginning to recognize several economic headwinds and the S&P 500 is down roughly 6% from its highest point since the recovery from the bear market low March 23. 

Jobless claims for the past week came in at 1.48 million versus 1.35 million expected. That’s the second straight week in which jobless data did not improve. Stocks, in May and early June, had rallied as the contraction in economic data was becoming less severe, a trend that has stalled some of late. Also, GDP growth came in at negative 5% for the first quarter. 

In order to see the data improve, the virus will have to stay at bay, which it isn’t doing. New virus cases hit a record 45,000 in the country Thursday. California, Florida and Texas seeing the worst of the pain. Investors fear more lockdowns, the impact of which will be blunted by monetary stimulus. But the market is hoping for more fiscal stimulus as short-term interest rates cannot fall much from here. 

"While a slight [economic] rebound could be in store for Q2, it will take some time to unwind the structural damage COVID has caused across the world,” wrote Mike Loewengart, Head of Investment Strategy at E*Trade in emailed remarks to reporters. "Also, as cases across the US tick up, the second wave we’ve been holding our breath for has become a reality in areas of the country that were less affected in March.” 

Leading stocks down were cyclicals like oil, with energy etf  (XLE) - Get Report down 0.8%, banking, with the bank ETF  (KBWB) - Get Report down as much as 0.5% and consumer discretionary. The S&P 500 consumer discretionary index fell 1.29%

Disney  (DIS) - Get Report down 2.5% as it is delaying the opening of parks because of the virus.  

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