Wall Street closed lower on Thursday, pulled down by health care and real estate stocks. Investor mood remained cautious about the tariff negotiations conducted by the Trump administration and the Fed's refusal to commit to rate cuts. All three benchmark indexes closed in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.7%, or 330.3 points, to close at 44,130.98. Twenty-two components of the 30-stock index ended in negative territory, while eight ended in positive.
The tech-heavy Nasdaq Composite fell 7.23 points, remaining virtually unchanged at 21,122.45.
The S&P 500 lost 23.51 points, or 0.4%, to close at 6,339.39. Eight of the 11 broad sectors of the benchmark index closed in the red. The Health Care Select Sector SPDR (XLV), the Real Estate Select Sector SPDR (XLRE) and the Materials Select Sector SPDR (XLB) declined 2.8%, 1.8% and 1.3%, respectively, while the Communication Services Select Sector SPDR (XLC) gained 0.9%.
The fear gauge CBOE Volatility Index (VIX) increased 8% to 16.72. A total of 19.65 billion shares were traded on Thursday, higher than the last 20-session average of 18.01 billion. Decliners outnumbered advancers by a 1.55-to-1 ratio on the NYSE, and by a 1.98-to-1 on the Nasdaq.
Markets Continue to Feel the Weight of Interest Rates and Tariff Uncertainty
On Thursday, investor sentiment on Wall Street continued to be cautious as renewed concerns over interest rates and ongoing tariff negotiations between the United States and China weighed heavily on the markets. Investors grappled with signals from the Fed that rate cuts may not come as quickly or as deeply as previously hoped. Recent economic data, including stubbornly strong labor market indicators and lingering inflationary pressures, reinforced the perception that the Fed would maintain a hawkish stance, leaving borrowing costs elevated for longer. This expectation curbed enthusiasm across interest-rate-sensitive sectors and added pressure on equities overall.
Simultaneously, the mood was further soured by an apparent lack of meaningful progress in U.S.-China tariff talks. While there had been some early optimism about diplomatic engagement, reports indicated that negotiations remained bogged down over structural issues and enforcement mechanisms. The uncertainty surrounding potential new tariffs or a re-escalation of trade tensions created a risk-off environment, especially for companies with significant international exposure.
Healthcare Sector Drags on Trump Letter
Donald Trump’s letter to 17 major drug manufacturers reignited concerns over potential political pressure on the pharmaceutical industry. In the letter, Trump criticized high prescription drug prices and urged companies to lower costs and increase transparency. The message stirred fears that drug pricing could become a major election issue, potentially leading to regulatory action if political momentum builds. The letter weighed on healthcare stocks, with several pharmaceutical shares slipping as investors braced for renewed scrutiny.
Consequently, shares of Eli Lilly and Company LLY and Merck & Co., Inc. MRK fell 2.6% and 4.4%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
For the week ending July 26, initial jobless claims came in at 218,000, an increase of 1,000 from the previous week's unrevised level of 217,000. The 4-week moving average was 221,000, a decrease of 3,500 from the prior week's unrevised average of 224,500.
Continuing claims during the week ending July 19 were 1,946,000, unchanged from the previous week's revised level. The previous week's level was revised down by 9,000 from 1,955,000 to 1,946,000. The 4-week moving average was 1,949,250, a decrease of 2,500 from the prior week's revised average. The previous week's average was revised down by 2,250 from 1,954,000 to 1,951,750.
Per the Bureau of Economic Analysis, PCE inflation for June increased 0.1%. The number for May was revised down to a 0.2% decrease from the 0.3% decrease reported previously. Core PCE inflation for June came in at a 0.3% increase, after increasing 0.2% in May. Personal income increased 0.3% in June after decreasing 0.4% in May. Personal Spending increased 0.3% after remaining unchanged in May. Disposable Personal Income came in at 0.3%. Personal Savings Rate for June remained unchanged at 4.5%.
Per the Institute for Supply Management, the Chicago PMI for July jumped to 47.1, coming in at 40.4 in June.
Monthly Roundup
In July, the S&P 500, the Nasdaq Composite and the Dow Jones Industrial Average climbed 2.2%, 3.7% and 0.1%, respectively. The three benchmark indexes recorded their third straight winning month.
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Merck & Co., Inc. (MRK): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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