Nvidia fell 4.4% and Amazon fell more than 1%, with the two companies contributing more than any other to the decline of the Nasdaq. Facebook lost 0.9%.
The S&P 500 tech sector index fell 0.8% and ended a four-day winning streak. Earlier this week, investor favor for heavy growth stocks pushed the S&P 500 and the Nasdaq to record highs.
The S&P 500 energy sector index fell 1.4% and followed a decline in crude prices amid expectations of increased supply after a compromise deal between major OPEC producers.
Data showed that the number of Americans filing new unemployment benefits claims fell to a 16-month low last week, as worker shortages and supply chain bottlenecks have grown. hampered the efforts of companies to increase their production in order to meet the high demand for goods and services.
Federal Reserve Chairman Jerome Powell told lawmakers he expected shortages and high inflation to ease. Yet many investors still fear that higher inflation could lead to an earlier than expected tightening of monetary policy.
“People are very nervous and concerned about inflation, tax rates and the midterm elections (2022). These three things are very much on people’s minds,” said Andrew Mies, chief investment officer of 6 Meridian, describing recent phone calls with clients of his company.
The Dow Jones Industrial Average rose 0.15% to close at 34,987.02 points, while the S&P 500 lost 0.33% to 4,360.03.
The Nasdaq Composite lost 0.7% to 14,543.13.
Morgan Stanley ended up 0.2% after beating quarterly earnings expectations, benefiting from a boost from record investment banking activity even as the windfall that supported results in the in recent quarters has slowed down.
The second quarter reporting season kicked off this week, with America’s four largest lenders – Wells Fargo & Co, Bank of America Corp, Citigroup Inc, and JPMorgan Chase & Co – posting combined earnings of $ 33 billion, but highlighting also the sensitivity of the sector to low interest rates.
Analysts on average expect 66% earnings per share growth for companies in the S&P 500, according to IBES estimate data from Refinitiv.
With the S&P 500 up around 16% year-to-date, investors will be looking for companies that can provide solid forecasts to justify sky-high valuations.
“Investors are definitely starting to look at the estimates for 2022,” Mies said. “I think you could see the stock market in six months essentially where it is now.”
Blackstone announced Wednesday night that it would pay $ 2.2 billion for a 9.9% stake in the life and retirement business of American International Group. AIG and Blackstone both gained more than 3%.
Johnson & Johnson plunged 1.2% after voluntarily recalling five aerosolized sunscreen products in the United States after detecting a carcinogenic chemical in some samples.
Falling issues outnumbered advancing ones on the NYSE by a ratio of 1.65 to 1; on the Nasdaq, a ratio of 1.58 to 1 favored the declines.
The S&P 500 posted 30 new 52 week highs and no new lows; the Nasdaq Composite recorded 29 new highs and 178 new lows.
Volume on the U.S. exchanges was 9.6 billion shares, compared to an average of 10.4 billion for the full session over the past 20 trading days.