The stock market fell Thursday after jobless claims dipped and housing permits came in weaker than expected. Mixed earnings reports from Alcoa, Allstate, Procter & Gamble and several financial stocks dragged on broad benchmarks.
Netflix shares lost nearly 2% ahead of earnings due out after the market close. The report will kick off fourth-quarter tech earnings.
The Nasdaq composite lost 0.9% while the S&P 500 shed 0.7%. The Dow Jones Industrial Average traded 0.6% lower while the small-cap Russell 2000 index fell 1.2%.
Volume fell on the Nasdaq and the NYSE vs. the same time on Wednesday.
The yield on the benchmark 10-year Treasury note rose three basis points to 3.4%. Crude oil prices rose 1.2% to $80.43 per barrel.
Initial unemployment claims dropped to 190,000 vs. 205,000 in the previous week. Claims were expected to rise to 215,000, per Econoday estimates.
Economic News Weighs On Stock Market
"The news of layoffs from tech firms may be the canary in the coal mine — in terms of forecasting a recession — or it may turn out to be a correction of the excesses that occurred during the pandemic," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. "In the meantime, jobless claims continue to run at a less-than-expected pace, signaling ongoing strength in the labor market. The Fed has raised rates so far, so fast that it is likely to cause a recession — and that's priced into the bond market. What's not priced into the stock market is a deeper, more damaging recession, and so far the data doesn't indicate one is imminent yet."
Dow Jones component Microsoft said Wednesday it plans to eliminate 10,000 jobs in response to the global economic slowdown, the company's largest layoffs in more than eight years. MSFT stock slid another 1.6% Thursday.
And Wall Street expects more layoffs at Google-parent Alphabet. GOOGL shares climbed 2% on the news.
Dow Jones tech giant Apple dropped 0.3%.
Housing starts and permits for December fell to 1.382 million and 1.33 million vs. expectations for 1.362 million and 1.38 million, respectively.
Given that building permits unexpectedly backtracked last month, "The future isn't as bright given that the level of permits is below starts," said Jennifer Lee, senior economist at BMO Capital Markets.
Nonetheless, the homebuilders index surged to 35 Wednesday, the first uptick after 12 months of declines. It shows that sentiment is finally improving among homebuilders.
Homebuilders Toll Brothers and D.R. Horton were down more than 2% Thursday, and the S&P Homebuilders ETF declined 2.8%.
Financials, Consumer Stocks Lead Declines
Novocure announced a series of C-suite changes Thursday as investor debate continues to haunt its recent lung cancer study. In response, NVCR stock tumbled more than 6%.
The leadership changes are meant to "prepare for future growth," Novocure said in a news release. The company went on to say that, after a review of Novocure's future needs, Chief Medical Officer Ely Benaim will step down and leave the company. In the interim, Piet Hinoul, current senior vice president and head of global medical affairs, will be the head of the medical department. Novocure is searching for Benaim's replacement.
Alcoa shares slid 4.9% after Q4 earnings fell short of expectations. Insurer Allstate lost nearly 7% after reporting a preliminary adjusted net loss for Q4 that missed consensus.
Credit card issuer Discover Financial Services and regional bank KeyCorp added to a string of losses in the financial sector, issuing weak reports.
Discover stock sold off 1.5%, while KeyCorp lost nearly 5%.
The S&P Consumer Discretionary ETF and the Financial Select Sector ETF were the worst-performing of all 11 S&P sectors, down 1.7% and 1.4%, respectively.
Electric-vehicle leader Tesla fell 1.3% as CEO Elon Musk remained embroiled in a San Francisco lawsuit. The litigation will decide whether Musk's 2018 tweets about taking Tesla private cost investors billions of dollars.
Energy giant Chevron climbed back above its 50-day line on Thursday, gaining 0.9%. It remains below a flat base's 189.78 buy point. Fourth-quarter earnings are due Jan. 27.
CVX stock shows a solid 93 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. The Composite Rating is designed to help investors easily find top growth stocks.
Stock Market Movers And Shakers
The Innovator IBD 50 ETF shed 2% in Thursday's stock market, led by solar plays SolarEdge and Sunrun.
SEDG lost nearly 10% Thursday, falling below its 50-day line but still within a cup with handle with a buy point of 341.78.
Construction supplier Fastenal gained 1.4% after beating top and bottom-line estimates.
PG stock declined 0.8% after earnings matched estimates. Procter & Gamble's sales beat targets but the fiscal Q2 report pointed to worsening volume trends.
Roblox fell 6.7% after being downgraded to underweight at Morgan Stanley. The analyst cited slower bookings growth in the second half of the year.
Axon Enterprise, formerly known as Taser, jumped 0.3% and has set its sights on a new breakout. With a 17% sustainable earnings growth rate, the security and safety firm passes muster for a new screen of Warren Buffett stocks.
Axon joins 34 other stocks, including Google parent Alphabet, on the screen. Axon also makes IBD Leaderboard and the IBD 50 list of the best growth stocks.
Meanwhile, meme stocks dropped Thursday after making a comeback this year. The Roundhill MEME ETF is still up more than 10% this year.
Follow Michael Molinski on Twitter @IMmolinski
