Wall Street stocks fell at the open on Thursday, as signs that the U.S. economy is warming up helped investors believe the Federal Reserve will raise interest rates for a longer period of time.
The Dow Jones Industrial Average (^DJI) was broadly unchanged, but the other major stock gauges lost ground after all three closed in the red on Wednesday. The S&P 500 (^GSPC) fell 0.7%, the tech-heavy Nasdaq Composite (^IXIC) fell more than 1.5% and Apple (AAPL) fell nearly 4%.
Stocks are under pressure after U.S. services activity unexpectedly hit a six-month high in August, a sign of resistance to higher borrowing costs in consumers and the broader economy. Meanwhile, gains in Treasury yields (^TNX) weighed on tech stocks, but were slightly lower on Thursday.
Apple shares continued to slide after reports that China has banned government officials from using iPhones and plans to extend the ban to state-owned companies. The move puts Apple in front of its biggest overseas market, which is its global production base.
Oil prices ( CL=F ) took a step back on Thursday as Chinese trade data failed to ease worries about a slowdown in the world’s second-largest economy, casting doubt on the Fed’s efforts to slow inflation. Questions are mounting whether China’s slowdown could pose a “significant risk” to the US economy.
Added to a new down season from Europe, the data shows concern about global demand.
Against that backdrop, the first U.S. jobless claims update later Thursday could enter the debate to convince the Fed to stick with higher levels at its September meeting in a few weeks. Jobless claims unexpectedly fell to their lowest level since February.
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