U.S. stocks traded lower on Thursday as investors weighed some weakness in the dollar and higher Treasury yields, amid some positive reports on Greece debt talks.
Earlier, stocks briefly halved losses as investors found some relief from news of progress towards a deal on Greece. An International Monetary Fund spokesman said the fund does not expect the country to exit the euro zone.
Meanwhile, Greece’s government signaled the biggest concessions so far as crunch talks with lenders on a cash-for-reforms package started in earnest, while trying to assure leftist supporters it had not abandoned its anti-austerity principles.
The Athens stock exchange closed up 3 percent, with most European equities ending mildly higher.
The Dow Jones industrial average traded about 90 points lower after the index briefly fell more than 140 points in morning trade. Leading blue chip declines, Apple fell more than 2 percent. Information technology was among the greatest laggards in the S&P 500.
The Nasdaq lagged behind the major indices, weighed by tech and biotechs. The iShares Nasdaq Biotechnology ETF (IBB) was down more than 1.5 percent.
The market is “at a recovery” from morning lows, said Tim Courtney, CIO at Exencial Wealth Advisors. “Part of it is what’s coming out of Greece. What I think is moving the market today and last week is, where the good news is going to come from.”
Corporate results have tended to beat estimates on earnings per share but miss on revenue.
Rising rates and lowered earnings expectations for stocks trading at high multiples makes the market “vulnerable,” said Bruce Bittles, chief investment strategist at RW Baird.
Analysts emphasized Thursday’s decline was only a slight pullback occurring on the last day of trading for the month, as the major indices remained near all-time highs and held gains for the year.
“It’s nothing more than a normal, modest correction,” said Paul Nolte, portfolio manager at Kingsview Asset Management. “Volume hasn’t picked up.”
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“You need a clear reporting of earnings (at these multiples) that propels stocks higher,” said Art Hogan, chief market strategist at Wunderlich Securities, noting that the U.S. dollar remained in focus.
The U.S dollar held lower against major world currencies after the euro spiked above $1.12 for the first time in two months on Wednesday.
“Certainly the change in the direction of the dollar has caused a lot of anxiousness,” Bittles said.
“I think the biggest meaning in the euro being strong is (ECB President Mario) Draghi’s plan isn’t working,” said Marc Chaikin, CEO of Chaikin Analytics. “It’s a negative for the U.S. economy as well because it takes off the table the whole notion of global expansion.”
But some currency strategists say the euro’s strength may be temporary.
German bund yields surged on Thursday, following a strong rally on Wednesday. U.S. Treasury yields also continued to trade higher, with the benchmark 10-year note yield hitting 2.10 percent on Thursday.
Investors also attempted to interpret Wednesday’s Fed statement which removed all calendar references on the timing of a rate hike. Officials have indicated a desire to raise rates at some point this year, with the market now anticipating an increase possibly in September.
The markets “seem to be concerned about when that may take place,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management (U.S.). “The data has been good enough to confirm that we continue to improve but not enough for the Fed to move aggressively.”
Ahead of the Fed’s statement, official data showed gross domestic product in the U.S. expanded at an only 0.2 percent annual rate, on Wednesday. That was a big step down from the fourth quarter’s 2.2 percent pace and marked the weakest reading in a year.
Weekly jobless claims came in at 262,000, a 15-year low. U.S. personal income was flat in March, and consumer spending up just 0.3 percent when adjusted for inflation.
April’s Chicago Purchasing Managers’ Index (PMI) read was 52.3, topping expectations.
Exxon Mobil posted first-quarter earnings that declined sharply from a year ago but handily beat expectations on both the top and bottom lines.
The S&P 500 traded down 7 points, or 0.34 percent, at 2,099, with utilities the greatest of nine laggards and telecommunications the only advancer.
The Nasdaq traded down 34 points, or 0.69 percent, at 4,989.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.
About three stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 301 million and a composite volume of 1.5 billion in late morning trade.
Crude oil futures gained 10 cents to $58.70 a barrel on the New York Mercantile Exchange. Gold futures fell $30.10 to $1,179.90 an ounce as of 11:42 a.m.
—Reuters contributed to this report.
On tap this week:
Earnings: AIG, Gilead Sciences, Visa, LinkedIn, Western Union, First Solar, Live Nation
Earnings: Chevron, CVS Health, Aon, Calpine, Clorox, Moody’s, Newell Rubbermaid, Duke Energy, Weyerhaeuser, TransCanada, VF Corp, Madison Square Garden, Legg Mason, CBOE
8:30 a.m.: Cleveland Fed President Loretta Mester
9:45 a.m.: Manufacturing PMI
10 a.m.: ISM manufacturing, construction spending, consumer sentiment
3:45 p.m.: San Francisco Fed President John Williams