By C Nivedita and Shreyashi Sanyal
(Reuters) – U.S. stocks fell on Thursday as millions of more Americans applied for jobless claims, taking the shine off a strong rally this month and eclipsing upbeat results from Facebook and Tesla.
All 11 S&P 500 sector indexes were trading lower, with financials <.SPSY>, materials <.SPLRCM> and utilities <.SPLRCU> leading declines.
Dramatic U.S. stimulus and hopes of a revival in business activity as states reopen from lockdowns have powered a Wall Street rally in April, putting the S&P 500 <.SPX> and Dow Jones index <.DJI> on course for their best months since 1987.
But investors remain cautious of the pace of the recovery from a looming recession, with economic indicators underlining the extent of the damage already done.
The Labor Department’s report showed initial jobless claims totaled 3.84 million for the week ended April 25, a day after data confirmed the biggest contraction for the U.S. economy in the first quarter since the Great Recession.
“The jobless claims figure is a kind of feedback from some of the policy that we’ve undertaken as a country to fight (the crisis), but hopefully a lot of these jobless folk will come back into the workforce,” said Matt Stucky, portfolio manager at Northwestern Mutual Wealth Management in Milwaukee, Wisconsin.
“The timing of when that happens is going to be a function of the road to recovery from the coronavirus.”
The Federal Reserve pledged on Wednesday to expand emergency programs to revive growth, but warned the economy could feel the weight of consumer fear and social distancing for a year.
At 11:29 a.m. ET the Dow Jones Industrial Average <.DJI> was down 259.15 points, or 1.05%, at 24,374.71, the S&P 500 <.SPX> was down 24.37 points, or 0.83%, at 2,915.14 and the Nasdaq Composite <.IXIC> was down 18.28 points, or 0.21%, at 8,896.43.
Facebook Inc <FB.O> jumped 5% after the social media giant posted better-than-expected quarterly revenue.
The pandemic has been less disruptive to tech-related stocks, with Facebook, Apple <AAPL.O>, Amazon.com <AMZN.O>, Netflix <NFLX.O> and Alphabet <GOOGL.O>,the so-called FAANG group of stocks, gaining between 12% and 25% this month.
Apple and Amazon.com will report results after markets close.
“The SPX price action during this crisis has been led by a handful of ‘haves’ (mostly the FAANGs) in a world in which most companies are ‘have nots’,” said Nancy Davis, founder of asset management firm Quadratic Capital Management in Greenwich, Connecticut.
Electric-car maker Tesla Inc <TSLA.O> climbed 3.1% after posting its third straight quarterly profit, taking investors by surprise as its automaker peers were hit by a slump in consumer demand and factory shutdowns.
McDonald’s Corp <MCD.N> shed 2.4% after it reported a 16.7% slide in quarterly profit as most of its restaurants across the globe limited their services to deliveries and take-aways.
American Airlines <AAL.O> fell 5% as the airline operator posted its first quarterly loss since emerging from bankruptcy in 2013 and warned of a $70 million a day cash burn.
Declining issues outnumbered advancers for a 2.29-to-1 ratio on the NYSE, nearly matching those on the Nasdaq.
The S&P index recorded two new 52-week highs and no new low, while the Nasdaq recorded 15 new highs and two new lows.
(Reporting by C Nivedita and Shreyashi Sanyal in Bengaluru; Editing by Sagarika Jaisinghani, Anil D’Silva and Arun Koyyur)