Wall Street retrenches in the runup to Friday's jobs report
NEW YORK (AP) — Wall Street is drifting lower on Thursday, as the countdown ticks toward Friday’s highly anticipated jobs report.
The S&P 500 was down 0.5% in late trading. After sprinting through May and rallying within a couple good days’ worth of gains of its all-time high, the index at the center of many 401(k) accounts has lost momentum as financial markets wait for the next big trigger to move, up or down.
The Dow Jones Industrial Average was down 84 points, or 0.2%, with about 45 minutes remaining in trading, and the Nasdaq composite was 0.9% lower.
Trading activity in options markets suggests investors believe the next big move for the S&P 500 could come on Friday, when the U.S. Labor Department will say how many more jobs U.S. employers created than destroyed during May. The expectation on Wall Street is for a slowdown in hiring from April.
A resilient job market has been one of the linchpins that’s propped up the U.S. economy, and the worry is that all the uncertainty created by President Donald Trump’s on-and-off tariffs could cause businesses to freeze their hiring.
A report on Thursday said more U.S. workers applied for unemployment benefits last week than economists expected. The number remains relatively low compared with history, but it still hit its highest level in eight months.
The data came as Procter & Gamble, the giant behind such brands as Pampers diapers and Cascade dish detergent, said it will cut up to 7,000 jobs over the next two years. Its stock fell 1.8%.
Also on the losing side of Wall Street was Tesla, which tumbled 15%. It's lost roughly 30% of its value so far this year as CEO Elon Musk’s relationship with Trump continues souring amid a disagreement over the president’s signature bill of tax cuts and spending.
Brown-Forman, the company behind Jack Daniel’s and Woodford Reserve, fell 17.6% and was heading for its worst day since it began trading in 1972.
Its profit and revenue for the latest quarter fell short of Wall Street’s expectations, and the company said it expects its upcoming fiscal year to be challenging because of “consumer uncertainty, the potential impact from currently unknown tariffs” and other things.
The CEO of PVH, which runs the Calvin Klein and Tommy Hilfiger brands, likewise cited challenges from “an increasingly uncertain consumer and macroeconomic backdrop.”
Its stock fell 16.5% even though it reported stronger revenue and profit for the latest quarter than analysts expected. The company cut its profit forecast for its full fiscal year, saying it will likely be able to offset only some of the potential hit it will take because of tariffs.
Hopes that Trump would lower his tariffs after reaching trade deals with other countries have been among the main reasons the S&P 500 has rallied back so furiously since dropping roughly 20% below its record two months ago. It’s now back within roughly 3% of its all-time high.
Trump boosted such hopes Thursday after saying he had “a very good phone call” with China’s leader, Xi Jinping, about trade and that “their respective teams will be meeting shortly at a location to be determined.”
It signals an easing of tensions between the world’s two largest economies. Both sides had earlier accused the other of violating the agreement that had paused the stiff tariffs each had put on the other, which threatened to drag the economy into a recession.
To be sure, nothing is assured amid Trump’s on-and-off rollout of tariffs, and markets took the latest detente with China relatively coolly.
Among Wall Street's winners was MongoDB, which jumped 11.2% after the database company likewise delivered a stronger profit than analysts expected.
Circle Internet Group, the U.S.-based issuer of one of most popular cryptocurrencies, surged 180% in its first day of trading on the New York Stock Exchange.
Expectations are also building in financial markets that the Federal Reserve will need to cut interest rates later this year in order to prop up an economy potentially weakened by tariffs. Yields took a sharp turn lower on Wednesday after a pair of worse-than-expected reports on the U.S. economy bolstered traders' bets for a cut.
The Fed has been keeping interest rates on hold this year after slashing them through the end of 2024. Part of the reason for the pause is that the Fed wants to see how much Trump’s tariffs will hurt the economy and raise inflation. While lower interest rates could boost the economy, they also tend to give inflation more fuel.
Treasury yields held steadier on Thursday ahead of Friday’s jobs report. The yield on the 10-year Treasury rose to 4.39% from 4.37% late Wednesday after tumbling from 4.46% the day before. It had been lower before Trump's encouraging description of his call with Xi.
In stock markets abroad, indexes in Europe were mixed amid modest moves after the European Central Bank cut its main interest rate again, as was widely expected.
The moves were larger in Asia, where South Korea’s Kospi jumped 1.5% after the country’s new president and leading liberal politician Lee Jae-myung began his term, vowing to restart talks with North Korea and beef up a partnership with the U.S. and Japan.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.