U.S. stocks continued to trade fitfully, with major indexes falling Thursday as investors assessed weekly jobless claims data and the latest global restrictions targeting the spread of the Omicron variant of the coronavirus.
The Dow Jones Industrial Average spent the morning falling, the afternoon rising, and closed nearly flat. It finished off less than a point—down 0.06—at 35754.69. The S&P 500 dropped 33.76 points, or 0.7%, to 4667.45. The benchmark index had closed 0.3% higher Wednesday.
Losses were worse for the tech-heavy Nasdaq Composite, which dropped 269.62, or 1.7%, to 15517.37. Its dip accelerated during the afternoon.
The erratic trading reflects the plethora of issues facing the market. Investors are generally optimistic, said Oanda analyst Edward Moya. Growth in 2022 should be good and U.S. equities should benefit from that, he said, but there is concern about the Omicron variant, wage and inflation pressure, and Federal Reserve monetary policy. “I think it’ll be very choppy the rest of the year,” he said.
The Federal Reserve’s policy-making body holds a two-day meeting next week, at which it may provide more details about how it plans to wind down its bond-buying program and when it plans to begin raising interest rates. What concerns stock investors, Mr. Moya said, is that the Fed might turn more aggressive than expected, tightening monetary policy and putting pressure on equities prices.
Stocks have swung back and forth in recent weeks, buffeted by conflicting headlines on the Omicron variant and mixed signals on the health of the economy. Investors are still awaiting further data on the strain’s severity and vaccine efficacy. Some pharmaceutical companies including Pfizer and GlaxoSmithKline have said this week that their shot and antibody treatment, respectively, appear to work against Omicron in early-stage studies.
European governments have moved to tighten restrictions, spurring concerns about setbacks to the economic recovery. U.K. Prime Minister Boris Johnson on Wednesday outlined a new work-from-home mandate and mask guidelines. A study released by a Japanese scientist said the variant was four times more transmissible than the Delta strain.
“There’s still a lot we don’t know. We’re waiting for details to emerge,” said Arun Sai, a multiasset strategist at Pictet Asset Management. On restrictions, “as long as it’s temporary, it doesn’t completely derail the recovery. We now know the playbook. We’re talking about a one- or two-quarter postponement of a recovery in services. That’s the critical element that’s at risk here.”
Some of the divergence is due to how the indexes are constructed. The Dow’s components are weighted by price. Two of its better performers on Thursday were UnitedHealth, which added $4.46, and McDonald’s, up $2.76. The S&P 500 and Nasdaq, however, are weighted by market cap. In the S&P, the gains in UnitedHealth and McDonald’s—with market caps of $445 billion and $196 billion, respectively—were outweighed by losses at Amazon and Tesla, which have market caps above $1 trillion.
For the Nasdaq, where tech names comprise about half the index, all of its biggest names—including Apple, Microsoft, Amazon and Tesla—fell.
Meme stock GameStop dropped 10% to $155.76 after the company posted earnings that showed a widening loss. Amazon.com fell 1.1% to $3,483.42 after the Italian government fined it $1.3 billion for alleged abuse of market dominance. The European Union is also investigating the e-commerce giant.
American Airlines fell 0.5% to $18.14 after The Wall Street Journal reported the company is planning to trim international flights next summer because of Boeing’s delays in delivering new 787 Dreamliners. Boeing lost 1.6% to $207.56.
In a sign the labor market is improving faster than expected, weekly jobless claims came in at 184,000, the lowest level since 1969, according to the Labor Department. Claims declined from the previous week and were below economists’ forecasts.
The yield on the benchmark 10-year Treasury note edged down to 1.486% Thursday from 1.508% Wednesday.
U.S. crude oil futures fell 2% to $70.94 a barrel, reversing direction after a broad rally this week. Crude had risen 9.2% since Monday, lifted by early indications that the Omicron variant may not weigh on energy demand as much as previously feared.
Bitcoin reversed direction after four days of gains, pulling down the wider cryptocurrency market. It traded down 5.1% at $47,906, down about 31% from its record high set in November. Ether, the second-largest crypto, was down 6.2% at $4,146.
In Europe, the pan-continental Stoxx Europe 600 ticked down 0.1%. UniCredit shares climbed 11% after the bank said it planned to return over $18 billion to shareholders by 2024. Deutsche Bank shares declined 3.4% after The Journal reported that the Justice Department had told the German lender that it might have violated a criminal settlement.
Investors are awaiting further data on Omicron’s severity and vaccine efficacy.
Photo: BRENDAN MCDERMID/REUTERS
In Asia, the Shanghai Composite Index advanced 1%, while Hong Kong’s Hang Seng Index climbed 1.1%. China’s producer-price index showed a 12.9% increase in November from a year earlier, a decline from the previous month but still more than economists expected. Consumer prices also rose.
Shares of China Evergrande Group fell more than 7%. China’s top central banker said Thursday that financial stress at the property developer and its peers should be dealt with according to market principles.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
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