U.S. stocks closed lower following a bond selloff that sent yields to multi-year highs. New filings for unemployment fell unexpectedly to near 49-year lows.
The benchmark 10-year U.S. Treasury yield climbed past 3.2% for the first time since 2011, and the 30-year yield hovered above 3.3%.
Equities competing for capital fell accordingly, and major U.S. indices tumbled. The Dow (^DJI) fell 0.75%, or 201 points, to 26,627.48 at market close, paring some losses after losing more than 350 points during intraday trading. The S&P 500 (^GSPC) slipped 0.82%, or 23.9 points, while the Nasdaq (^IXIC) fell 1.81%, or 146 points.
On Yahoo Finance’s Final Round on Wednesday, legendary investor Howard Marks raised a caution flag on the markets.
“I’ve been doing this for 50 years,” Marks said. “When I’ve seen booms invariably they were characterized by three things: too much optimism, too little risk aversion and caution, too much money chasing too few ideas.”
“To some extent, those things are present today,” Marks added. “So it’s time to start thinking about caution.”
ECONOMY: Jobless claims drop to near five-decade low
The number of Americans filing for unemployment fell to a near 49-year low last week, according to a report Thursday from the Department of Labor. The level of seasonally adjusted jobless claims fell to 207,000 for the week ending Sept. 29, from an upwardly revised level of 215,000 for the week prior. Continuing claims fell by 13,000 to 1.65 million for the week ending Sept. 22.
“The increase in jobless claims triggered by Hurricane Florence was very modest, and smaller than we expected,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note. “It is now fading, and claims likely will soon hit new cycle lows, breaching the 200K mark for the first time since 1969.”
The report bolsters evidence of a tightening labor market and follows stronger-than-anticipated results in private-sector payrolls and in the non-manufacturing sector.
New orders for U.S. manufactured goods increased 2.3%, or $11.5 billion, to $510.5 billion, the Census Bureau said Thursday. The rate marks the largest increase since Sept. 2017 and topped average analyst expectations of a 2.1% increase, according to data compiled by Bloomberg, and follows a 0.5% decrease in July. New orders for manufactured durable goods increased 4.4%, narrowly missing expectations of 4.5% increases, according to average estimates compiled by Bloomberg. Transportation equipment orders were up 13.1%, the most since June 2017, helping to drive the increase.
NEWS: Mike Pence accuses China of “meddling in America’s democracy”
Vice President Mike Pence claimed in a speech Thursday that China has used spies, tariffs, coercion and propaganda to try and influence American public opinion. “China is meddling in America’s democracy,” Pence said, speaking from prepared remarks to the Hudson Institute in Washington. The speech follows statements President Donald Trump made during a meeting at the U.N. Security Council last week accusing China of attempting to interfere in the upcoming 2018 election, without providing much in the way of additional details. China has rejected the accusations.
Bloomberg Businessweek reported Thursday that Amazon and Apple may have been among organizations who had some of their hardware infiltrated by Chinese spies by way of a microchip planted during the equipment’s manufacturing. The chips may have been introduced by a Chinese server company, Super Micro, Bloomberg reported. Apple, AWS and Super Micro each disputed the claims, which were based on sourcing from anonymous government and corporate individuals. Shares of Super Micro plummeted Thursday following the report.
SoftBank (SFTBY) and Toyota (TM) are working together to create a new joint venture called Monet to develop businesses that will use connected and autonomous vehicle technology for new services, including mobile convenience stores and just-in-time vehicle dispatch services. Monet will launch in April 2019 with an initial capital injection of $17.5 million. Softbank will own 50.25% of the venture, with Toyota claiming the remainder. The announcement comes on the heels of Honda’s announcement Wednesday to invest a total of $2.75 billion into General Motors’s self-driving car unit Cruise.
E-commerce platform eBay (EBAY) has accused Amazon (AMZN) of poaching its independent sellers through its messaging system, according to a report Wednesday from the Wall Street Journal. eBay sent Amazon a cease and desist letter after reportedly discovering that more than 50 Amazon sales representatives had sent more than 1,000 messages to eBay sellers to try to woo them over to Amazon Marketplace. Amazon said in a statement to The Verge that the company is conducting a thorough investigation of the allegations, and eBay told the WSJ it “will take the appropriate steps, as needed, to protect eBay.”
STOCKS: Cloudera and Hortonworks announce merger, Barnes & Noble sees resurgence
Snap (SNAP) shares fell to an all-time low Thursday following bearish reports by at least two research firms. The social media platform’s price target was slashed to $7 per share from $9 by Evercore ISI. Analyst Anthony DiClemente said Facebook-owned Instagram is “irreversibly reducing” Snap’s ability to deliver on long-term expectations. Citi Research also lowered its price target to $7 from $8 for shares of Snap and reiterated a sell rating. Shares were down 5.29% to $7.80 per share at market close.
Cloudera (CLDR) and Hortonworks (HDP) announced Wednesday that they had entered into a $5.2 billion merger, combining two enterprise software companies that have commercialized Hadoop open-source big data software. The all-stock merger — called a “merger of equals” in the statement announcing the deal — will leave Cloudera stockholders with 60% equity in the new venture and Hortonworks stockholders with 40%. Cloudera CEO Tom Reilly will be the new top executive of the company, and Hortonworks CEO Rob Bearden will be a member of the board. Shares of each company were up more than 10% at the end of trading Thursday.
Shares of Barnes & Noble (BKS) surged more than 20% after the bookseller’s board of directors said Wednesday it was considering a sale of the struggling company and had tapped a special committee to review offers. One of the offers came from the New York City-based company’s founder and chairman, Leonard Riggio, who owns about 19% of the stock, according to company filings.
Cannabis company Tilray (TLRY) is looking to raise $400 million in a debt sale, comprising convertible senior notes due 2023. The funds will be used “for working capital, future acquisitions and general corporate purposes” and for the company to repay a $9.1 million existing mortgage related to its Nanaimo, British Columbia facility. Shares of Tilray fell more than 7% to $145.57 per share at market close.
Beverage company Constellation Brands (STZ) beat expectations of earnings and revenue in the second quarter, the company reported Thursday. The Corona-maker reported adjusted earnings per share of $2.87 on revenues of $2.99 billion. It also upped its profit guidance to between $9.60 and $9.75 per share on an adjusted basis for the year ending Feb. 2019, versus its previous outlook of $9.40 to $9.70 per share. The company in August had announced a $4 billion investment into cannabis company Canopy Growth Corporation. Shares of the company ended trading Thursday up more than 5% to $222.12 per share.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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