The Dow Jones Industrials Average retreated after hitting an intraday record high in the previous session, while the benchmark S&P 500 index was just about 15 points short of from its early September record.
The Dow on Thursday eased from a record high hit in the previous session as IBM shares fell after its quarterly report, with the potential impact of supply chain disruptions and labor shortages on profits taking the center stage this earnings season.
The benchmark S&P 500 index edged lower, but was just about 10 points short of its early September record, while the Nasdaq drew support from a rise in mega-cap growth companies. “Stocks are climbing to new highs and anytime the market is trading at or near its all-time high, it is not unusual to see a little bit of more intraday volatility…and it should not concern investors,” said Tom Mantione, managing director, UBS Private Wealth Management in Stamford, Connecticut.
Six of the 11 major S&P 500 sectors were trading lower, with energy stocks falling the most. IBM tumbled 8.2% after it missed market estimates for quarterly revenue as its managed infrastructure business suffered from a decline in orders.
Investors are keeping a close eye on growth outlook from companies facing rising costs, labor shortages and supply chain constraints, with analysts expecting profit of S&P 500 companies to rise 33.7% from a year earlier, according to Refinitiv data.
“They (supply chain constraints) definitely are a concern. Things like semiconductor chips in particular have held back the economy to some degree and have put some upward pressure on inflation,” said Jon Adams, senior investment strategist for BMO Global Asset Management.
Tesla Inc erased early declines to rise 3.0% as investors digested the EV maker’s upbeat earnings, despite the company warning of supply-chain hurdles. Other growth stocks including Facebook Inc, Microsoft Corp and Amazon.com Inc were higher by early afternoon trading.
Data showed the number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tightening labor market, though a shortage of workers could keep the pace of hiring moderate in October.
At 12:00 p.m. ET, the Dow Jones Industrial Average was down 111.47 points, or 0.31%, at 35,497.87, the S&P 500 was down 2.15 points, or 0.05%, at 4,534.04 and the Nasdaq Composite was up 38.84 points, or 0.26%, at 15,160.52.
American Airlines rose 1.2% after posting a smaller-than-expected quarterly loss, while Southwest Airlines Co fell 1.5% after it said it expected current quarter profits to remain elusive.
HP Inc gained 5.9% as brokerages raised their price targets on the stock after the personal computer and printer maker forecast upbeat fiscal 2022 adjusted profit and raised its annual dividend.
Declining issues outnumbered advancers for a 1.60-to-1 ratio on the NYSE and for a 1.22-to-1 ratio on the Nasdaq.
The S&P index recorded 48 new 52-week highs and no new low, while the Nasdaq recorded 84 new highs and 24 new lows.