US stocks fell on Thursday as weak economic data came in, despite better-than-expected Meta ( META ) results and hints from the Federal Reserve about a September rate cut.
The S&P 500 (^GSPC) fell nearly 1%, while the tech-heavy Nasdaq Composite (^IXIC) erased earlier gains to fall more than 1% after closing Wednesday with big gains. The Dow Jones Industrial Average (^DJI) fell nearly 500 points, or 1.3%.
The 10-year Treasury yield (^TNX) moved below the 4% level for the first time since February, hovering near 3.98%.
The latest ISM data out on Thursday showed the US manufacturing sector slipped into contraction territory during July. Another release showed jobless claims rose to an 11-month high last week and construction spending unexpectedly declined in June.
The reading reflects a cooling in the U.S. economy that has fueled concerns about the risk that interest rates at historic highs could drive them into recession.
Stocks first moved higher after Fed chairman Jerome Powell bolstered market confidence in a September interest rate cut, saying it “could be on the table.” Traders had typically expected a 25-basis-point reduction, but bumped their bets on a 50-basis-point move after policymakers kept rates unchanged.
Read more: 32 charts that tell the market and economy today
The market is now counting down to Friday’s release of the July jobs report, watching closely for further evidence of a slowdown that could shape Fed policy.
Meanwhile, investors are watching quarterly results, especially from Big Tech names, after Meta’s strong report late Wednesday. Shares in the owner of Facebook rose 8% ahead of the market’s earnings estimate and signs that solid digital advertising revenue will give AI investment time to pay off.
Earnings from Apple (AAPL) and Amazon (AMZN) due after the bell could test Meta-driven bullishness for technicians. They will also test the possibility that AI trades can deliver on their promise, which took a hit from the disappointing “Magnificent Seven” earnings.
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