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Macy's -13-%
Stocks Pull Back From All-Time Highs on Disappointing Earnings
Thursday’s moves put U.S. stock indexes on course for their biggest declines since at least the start of the month
Riva Gold
Updated May 11, 2017 10:17 a.m. ET
By
Riva Gold
U.S. stock indexes pulled back Thursday, dragged by disappointing earnings results that weighed on shares of consumer discretionary companies.
The Dow Jones Industrial Average fell 127 points, or 0.6%, to 20817 shortly after the opening bell. The S&P 500 lost 0.6% and the Nasdaq Co mposite shed 0.7%.
Thursday’s moves put U.S. stock indexes on course for their biggest declines since at least the start of the month. While shares have moved individually in response to earnings, major indexes have barely budged in recent sessions, hovering around all-time highs just as volatility has collapsed.
“Right now, there’s a sense that things are pretty good economically and from an earnings perspective, and that should continue” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “Investors are more willing to move into the market, and less skittish to downturns.”
Among clients, “we’re starting to see retail investors wanting to take more risk,” he added.
Consumer discretionary shares in the S&P 500 fell 1.1% on Thursday, one of the worst performing sectors in the broad index, after retail giants including Macy’s and Kohl’s reported tepid quarterly results. Shares of Macy’s shed 13% after the firm reported a bigger-than-expected slide in revenue for the first quarter, while Kohl’s, which said same-store sales fell more than expected, lost 5%.
Technology shares, one of the best performers in the stock market this year, fell 0.7% in the S&P 500. Shares of Snapchat parent Snap plunged 21% after the company said Wednesday afternoon that it was struggling to maintain strong user growth.
As stocks fell, government bonds strengthened, with the yield on the 10-year U.S. Treasury note slipping to 2.405%, according to Tradeweb, from 2.414% Wednesday. Yields fall as bond prices rise.
The Bank of England held the central bank’s benchmark interest rate steady at 0.25% and signaled they were in no rush to raise borrowing costs from record lows, despite above-target inflation.
The Bank of England held the central bank’s benchmark interest rate steady at 0.25% and signaled they were in no rush to raise borrowing costs from record lows, despite above-target inflation. Photo: Simon Dawson/Bloomberg News
Elsewhere, the British pound was down 0.6% against the U.S. dollar at $1.2857 after the Bank of England kept its rates unchanged on Thursday and forecast steady growth for the U.K. in the coming years, as long as it exits the European Union smoothly.
”A lot of people were looking for a potential second dissenter [on a rate rise],” said Tim Graf, head of macro strategy for EMEA at State Street Global Markets , noting some investors were also likely reacting to the BOE’s modest tweaks to its growth and inflation forecasts.
Still, on the whole, “I don’t look at this as a major shift,” he said.
Earlier, Japan’s Nikkei Stock Average rose 0.3% and Hong Kong’s Hang Seng Index added 0.4%, with both indexes finishing at their highest levels since 2015. South Korea’s Kospi climbed 1.2% to a fresh closing record.
—Akane Otani contributed to this article.
Write to Riva Gold at
riva.gold@wsj.com