Healthcare and energy companies led U.S. stocks lower Thursday, ending a three-day winning streak for the Standard & Poor’s 500 index. The decline was only the benchmark index’s fourth loss this month.
The modest sell-off came as investors weighed mixed economic data and company earnings reports while keeping an eye on Washington, where U.S. and Chinese negotiators resumed high-level talks aimed at ending their costly trade dispute. Treasury yields rose, and the price of gold fell.
Some of the selling may have been driven by traders electing to take some profits after a big rebound in recent weeks, which came after a steep sell-off in the last three months of 2018, said Erik Wytenus, global investment specialist at J.P. Morgan Private Bank.
“Markets need a little bit of an opportunity to breathe,” he said. “We definitely have seen some market participants lightening up some risk, given the size of that bounce back, because any way you slice it, we’re late in the [economic] cycle.”
The S&P 500, which has risen each of the last three weeks, fell 9.82 points, or 0.4%, to 2,774.88. The Dow Jones industrial average fell 103.81 points, or 0.4%, to 25,850.63.
The Nasdaq composite fell 29.36 points, or 0.4%, to 7,459.71. The Russell 2000 index of smaller-company stocks fell 6.11 points, or 0.4%, to 1,575.55.
The sell-off followed a torrid rise for stocks since late December. The S&P 500 is up 10.7% for 2019. That’s a better performance than the index has turned in for three of the last four full years.
Thursday’s losses were broad, with healthcare stocks, banks, energy and communications companies accounting for much of the decline. CVS Health slid 2.9%, and SVB Financial Group lost 2.1%. CenturyLink declined 4.1%. Oil and natural gas explorer Concho Resources dropped 7.8%.
Stocks headed lower from the get-go Thursday morning on a mix of new economic data.
The Labor Department said fewer workers applied for unemployment benefits last week than economists expected, an encouraging sign that layoffs are low. A separate report said that orders for big-ticket manufactured goods weren’t as strong in December as expected. Meanwhile, the National Assn. of Realtors said sales of previously occupied U.S. homes fell 1.2% in January to their lowest pace in more than three years.
The mixed data add to concerns that economic growth will slow in the United States and around the world this year.
Despite the solid profit growth in the last quarter, investors are cautious about how businesses will fare as signs of weakness in the global economy emerge. The trade war between the United States and China has also clouded the outlook for company profits this year.
“Trade is the big one right now because there’s still a lot of uncertainty on it,” said Craig Birk, chief investment officer at Personal Capital.
The world’s two biggest economies are locked in a trade war that President Trump started over allegations that China deploys predatory tactics to try to overtake U.S. technological dominance. Beijing’s unfair tactics, trade analysts agree, include pressuring American companies to hand over trade secrets and in some cases stealing such secrets outright.
The Trump administration had said it will increase its import taxes on $200 billion in Chinese goods to 25% from 10% if the two sides haven’t reached a resolution by March 2. But Trump in recent days has signaled a willingness to extend the deadline if negotiators are making progress.
“The big thing is just avoiding the hike to 25% tariffs,” Birk said. “The 10% [tariffs] had a real impact, but it was easily absorbed by the economy, and most people didn’t change the fundamental way they operated their business. A 25% tariff on many goods would be a different story and have much bigger impact.”
Traders also got a mixed picture in Thursday’s batch of company earnings reports.
Domino’s Pizza shares slumped 9.1% after the pizza chain reported weak fourth-quarter growth at its stores and posted results that fell short of Wall Street forecasts.
Avis Budget Group jumped 17.1% after reporting earnings that were much better than analysts expected.
Norwegian Cruise Line Holdings climbed 3.4% after the cruise line operator’s revenue surged in the fourth quarter and it gave investors a solid forecast.
Johnson & Johnson edged down 0.7% after the world’s biggest maker of healthcare products disclosed that it had received federal subpoenas related to litigation over its baby powder.
Benchmark U.S. crude fell 0.3% to $56.96 a barrel in New York. Brent crude, used to price international oils, was little changed at $67.07 a barrel in London.
Wholesale gasoline rose 1% to $1.61 a gallon. Heating oil rose 0.9% to $2.04 a gallon. Natural gas climbed 2.3% to $2.70 per 1,000 cubic feet.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.69% from 2.65%.
The dollar fell to 110.68 yen from 110.84 yen. The euro weakened to $1.1336 from $1.1350.