Technology, energy and healthcare sectors lead losses
U.S. stocks closed lower on Thursday, 03 November 2016 marking the S&P 500's longest losing streak since the depths of the financial crisis, as Facebook shares slumped and investors fretted over election uncertainty. Equity indices stumbled in the opening hour as a reversal in crude oil and weakness in the influential technology sector weighed on the broader market. This was the eighth successive drop for Wall Street.
The Dow Jones Industrial Average fell for a sixth straight day, declining 28.97 points, or 0.2%, to close at 17,930.67. The Nasdaq Composite fell 47.16 points, or 0.9%, to 5,058.41, as Facebook, one of its largest components, dropped sharply. The S&P 500 finished down 9.28 points, or 0.4%, at a nearly four-month closing low of 2,088.66, with eight of the main 11 sectors closing lower. The tech and health care sectors led the decliners, each with a 1% loss.
Eighteen out of thirty Dow components ended lower with shares of Pfizer and Intel dragging on the average.
A number of economic reports, including jobless claims, productivity data, factory orders and the nonmanufacturing ISM survey, largely underlined a theme of steady economic growth and were seen as strong enough to justify expectations for the Federal Reserve to raise interest rates at its December meeting. The central bank kept interest rates unchanged Wednesday, but signaled that it's inching closer to a December interest-rate hike.
Oil began the day on a modestly higher note, rebounding from its recent losing streak. The energy component has been under pressure in recent days as investors reassess the previously announced OPEC supply freeze agreement and mull over some disappointing weekly inventory data. WTI crude slipped below the $45.00/bbl in the opening hour, finishing down 2.0% at $44.45/bbl.
Shares in Facebook closed down 5.7% after the social-media giant warned late Wednesday that growth rates for its advertising revenue will come down meaningfully.
Among economic reports expected for the day, the number of people who applied for unemployment benefits at the end of October rose by 7,000 to a three-month high of 265,000, but the rate of layoffs in the U.S. remains extremely low. Initial claims for the week ending October 29 rose by 7,000 to 265,000 (consensus 256,000). Continuing claims for the week ending October 22 decreased by 14,000 to 2.026 million.
Meanwhile, American firms and employees boosted their productivity in the third quarter for the first time in 2016, but the longer-term trend is still a poor one that bodes ill for the U.S. economy. Nonfarm business sector labor productivity increased at a 3.1% annual rate in the third quarter (consensus 1.8%). This was the first increase after three consecutive quarterly declines and was further underpinned by an upward revision to second quarter productivity to -0.2% from -0.6%.
Separate report showed that factory orders rose 0.3% in September. Meanwhile, ISM services index fell to 54.8% in October from 57.1%, below the 56% forecast.
Treasuries finished on a mixed note as the long end of the curve underperformed. The yield on the 2-yr note finished flat (0.82%) while the yield on the 10-yr note finished the day up one basis point (1.81%).
Today's trading volume was above the average of 860 million as more than 880 million shares changed hands at the NYSE floor.
Tomorrow's economic data will include the 8:30 ET release of the September Trade Balance (consensus -$38.5 billion) and the Employment Situation Report for October. Market expects the jobs report to show an increase of 175,000 in nonfarm payrolls.
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