Wall Street retreated Thursday, falling amid vanishing hopes for an interest rate cut and a disappointing forecast from Apple Inc. that muted investors’ enthusiasm for technology stocks.
NEW YORK (AP) — Wall Street retreated Thursday, falling amid vanishing hopes for an interest rate cut and a disappointing forecast from Apple Inc. that muted investors’ enthusiasm for technology stocks.
Government data released Thursday indicated slowly rising prices for consumers, as well as a surprising plunge in jobless claims to an 11-month low and a ramp-up in housing construction. The reports pointed to an economy that’s more resilient than the market has thought, leading more investors to lower their expectations for a rate cut. A cut could boost consumer spending by making debt less cumbersome and help companies pull in higher profits.
“People have been focusing so much on the weak housing market, but it doesn’t look like it’s spilling at all into the rest of the economy. This expansion is going to go on,” said Brian Gendreau, investment strategist for ING Investment Management. “The market has been pricing in a rate cut. It’s still in there, but with a lot less conviction than before.”
Meanwhile, Apple issued a forecast for the current quarter that was below the market’s estimates, leading investors to believe their expectations for computer and electronics sales this year might have been too high. The report overshadowed strong profits from financial services companies like Merrill Lynch & Co.
Crude oil’s drop to $50 a barrel Thursday also caused investors to shudder. Though low energy prices help consumers, the plunge could mean big losses for companies that have money in commodities as part of their investment strategy.
According to preliminary calculations, Dow Jones industrial average slipped 9.22, or 0.07 percent, to 12,567.93.
Broader stock indicators were also lower. The Standard & Poor’s 500 index fell 4.24, or 0.30 percent, at 1,426.38. The Nasdaq composite index declined 36.21, or 1.46 percent, at 2,443.21 – its biggest one-day drop since Nov. 27, when it fell by 2.21 percent. The technology-laden Nasdaq is still up on the year, however.
Bonds fell slightly, with the yield on the benchmark 10-year Treasury note at 4.77 percent, down from 4.78 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices slipped.