Stocks fell sharply on Thursday as big technology shares declined ahead of their earnings reports after the bell. Investors also digested a record drop in GDP.
The Dow Jones Industrial Average traded 500 points lower, or 1.9%. The S&P 500 slid 1.5%. The Nasdaq Composite dropped 1.1%.
Apple, Amazon, Alphabet and Facebook, representing nearly $5 trillion in market capitalization, are all set to report. All four shares were lower.
The Big Tech reports come after each stock has posted massive year-to-date gains. Facebook and Alphabet are both up more than 13% in 2020. Amazon has surged 64.2% in that time and Apple is up 29.5% this year.
Meanwhile, U.S. weekly jobless claims came in at 1.434 million, roughly in line with estimates. However, continuing claims, or those who have been collecting for at least two weeks, totaled 17.018 million, up from about 16 million last week.
“The stock market has to look forward and most economic data looks backwards,” said David Bahnsen, chief investment officer of The Bahnsen Group. “Investors should be prepared for a choppy process of data digestion, but not be surprised that the market feels the future is better than the present and that unprecedented stimulus and liquidity exist to drive valuations.”
Thursday’s data sent the benchmark 10-year Treasury yield lower to around 0.5%, putting pressure on bank stocks. JPMorgan Chase, Goldman Sachs and Bank of America all fell more than 2.5%. Citigroup dropped 4.5%.
The move lower on Thursday follows a session that saw major averages posting solid gains after the Federal Reserve kept the overnight U.S. rate in a range between 0% and 0.25%. The central bank noted that while the economy has recovered slightly, activity and employment remain “well below their levels at the beginning of the year.” Fed Chairman Jerome Powell added the central bank will keep an accommodative stance until the economy has “weathered” the effects of the coronavirus pandemic.
“Powell made it loud and clear that our economic recovery is dependent on how we progress in fighting the pandemic,” said Mike Loewengart, managing director of investment strategy at E-Trade. “Although investors may not be deterred by the surge in virus cases, the stock market is less of a focus for the Fed than the economy–and while the two are related, they are far from the same.”
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Stocks fell sharply as big technology shares declined ahead of their earnings reports after the bell. Investors also digested a record drop in GDP.