U.S. stocks finished below the waterline (except for the Dow) after a choppy session on Thursday, pulling back further from the record highs they reached at the start of the week after the U.S. Federal Reserve’s chair said recent inflation was uncomfortably above the levels that the central bank seeks.
At the finishing bell, on the New York Stock Exchange (NYSE), the broad-based Standard & Poor’s 500 Index finished the session -14.27 points lower, or -0.33%, to end at 4,360.03.
The technology-focused Nasdaq Composite Index fell -101.8 points, or -0.70%, to 14,543.1.
In contrast, the blue-chip Dow Jones Industrial finished its choppy session Thursday +53.79 points higher, or +0.15%, to 34,987.02, the second-highest close in its history.
Amazon slipping -1.3%, while Google-parent Alphabet shares slid -0.9%, and Apple finished the session -0.4% lower.
Technology and communications stocks, and companies that rely on consumer spending, accounted for much of the pullback, outweighing gains elsewhere in the market.
Energy stocks fell following a broad slide in energy prices.
Among the gainers were financial stocks, including banks, which have been reporting mostly solid earnings.
In bond markets, the yield on the 10-year Treasury note continued its two-day decline to 1.297%, most in a week, from 1.356% Wednesday. Yields fall when prices rise.
On Thursday, U.S. Federal Reserve Chairman Jerome Powell delivered his second day of testimony before Congress.
Powell reiterated that signs of inflation will likely remain elevated in the coming months before moderating while acknowledging that the U.S. is in the midst of an unparalleled economic reopening on the heels of a pandemic-induced recession.
“The challenge we’re confronting is how to react to this inflation, which is larger than we had expected or that anybody had expected. To the extent that it is temporary, then it wouldn’t be appropriate to react to that. But to the extent that it gets longer and longer, we’ll have to continue to re-evaluate the risks that would affect inflation expectations and would be of longer duration, and that’s what we’re monitoring,” Powell said.
In a testimony to the House Committee on Financial Services on Wednesday, Fed Powell told lawmakers that the central bank wouldn’t be in a hurry to start paring monthly asset purchases and that the economy “is still a ways off” from the Fed’s goals.
U.S. Treasury Secretary Janet Yellen said she predicts prices could continue to rise for several more months before cooling off.
“I’m not saying that this is a one-month phenomenon. But I think over the medium term, we’ll see inflation decline back toward normal levels, but, of course, we have to keep a careful eye on it,” Yellen said.
Fresh figures on Thursday showed that the number of Americans who applied for first-time unemployment benefits fell to 360,000 in the week ended July 10, down from 386,000 in the week prior.
The U.S. Federal Reserve has said that inflation and the Labor market are two key factors it is monitoring to determine monetary policy.