US stocks fell after a strong day of gains on Thursday as the market stuck in a trading range and investors ignored solid earnings and economic data.
The S&P 500 fell 0.1%, weighed down by energy and materials. The Dow Jones Industrial Average fell 50 points while the Nasdaq Composite rose 0.2%.
Southwest Airlines’ shares rose 1.7% after the airline announced that vacation bookings would continue to rise and “breakeven” by June. Southwest also posted a less than expected loss in the first quarter.
Dow Inc. fell more than 4% even after the chemical company beat earnings and sales estimates for the first quarter. The stock is still up more than 10% through 2021.
The market stayed lower after weekly jobless claims read better than expected. The Department of Labor said Thursday that initial unemployment insurance claims totaled 547,000, down from the Dow Jones estimate of 603,000.
So far, companies have largely exceeded Wall Street’s expectations this earnings season, but strong first quarter results are not allowing the market to climb higher after record highs rose near multi-year highs.
“The string of strong positive EPS surprises is likely to continue, but the increased valuations are now ubiquitous. Sentiment is overly optimistic. A possible corporate tax change is an overhang,” said Maneesh Deshpande, head of equity derivatives strategy at Barclays in one Note.
Even so, the company raised its year-end S&P 500 target to 4,400, which would translate into a 6% profit from here. Barclays warned that an uptrend beyond target is unlikely.
On Thursday, the Republican Party tabled its counter-offer to President Joe Biden’s $ 2 trillion infrastructure plan. The senators proposed a $ 568 billion framework that includes funding for bridges, airports, roads and reservoirs. Tax increases are not included.
American Airlines erased previous earnings and went negative even after the company announced that cash flow was positive at the end of the quarter with no debt payments.
Shares rose on Wednesday to see a two-day decline as companies tied to the reopening of the economy led the way up. The Dow was up 316 points, or 0.93%, while the S&P 500 was up 0.93%. At 1.19%, the Nasdaq Composite was the relative outperformance of the major indices.
Small caps were a particular strength point during the session. The Russell 2000 finished the day 2.35% higher than its best day since March 1st.
The Dow and S&P 500 are less than 1% off regaining their record highs last Friday amid ongoing optimism about the pace of the economic recovery.
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