Stocks tumbled Thursday, with the Dow Jones Industrial Average closing nearly 500 points lower after fresh data stoked concerns of a potential recession.
The Dow dropped 494.82 points or 1.21% after it plunged 744.22 points or 1.8% earlier in the session. It closed at 40,347.97. The S&P 500 also slid 1.37% to end at 5,446.68. The Nasdaq Composite slipped 2.3% to 17,194.15 while the Russell 2000 index dropped 3% following its recent rally.
Furthermore, the US Treasury yield also fell, with the 10-year yield dropping below 4%.
Concerns Over a Potential Recession
The lagging performance in the stock market came after fresh data revealed that first-time applications for unemployment benefits rose last week to an estimated 249,000 filings, according to Labor Department data released Thursday. That is the highest tally recorded since last August.
Continuing claims, or those filed by people who have received jobless benefits for at least a week, also jumped to 1.877 million, marking the highest level reported since November 2021.
In addition, the ISM manufacturing index, a barometer of factory activity in the US, came in at 46.8% in July, down 1.7% from June.
Furthermore, central bank policymakers chose to keep their benchmark rates at the highest levels in two decades. However, Federal Reserve Chair Jerome Powell signaled that a rate cut could happen in September, adding that inflation is now only "somewhat" elevated.
What Experts Are Saying
Chris Rupkey, chief economist at FWDBONDS, said the jobless claims data from Thursday could point to a possible economic downturn
"The stock market doesn't know whether to laugh or cry because while three Fed rate cuts may be coming this year and 10-year bond yields are falling below 4.00%, the winds of recession are coming in hard," he said, as quoted by CNBC.
"With a package of data released today suggesting the economy is cooling at a faster - and perhaps too fast - pace, the drop in the ten-year Treasury yield to below 4% reflects a looming economic growth scare," Quincy Krosby, chief global strategist at LPL Financial, in a Thursday note, per CNN.
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