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U.S. stocks close lower despite strong GDP

NEW YORK
2023-07-28 07:13

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NEW YORK, July 27 (Xinhua) -- U.S. stocks ended lower on Thursday amid concerns over a possible policy tweak by the Bank of Japan, as stocks erased early gains scored after a new report showed the U.S. economy grew at a faster-than-expected pace in the second quarter.

The Dow Jones Industrial Average fell 237.40 points, or 0.67 percent, to 35,282.72. The S&P 500 lost 29.34 points, or 0.64 percent, to 4,537.41. The Nasdaq declined 77.18 points, or 0.55 percent, to 14,050.11.

Ten of the 11 primary S&P 500 sectors ended in red, with real estate and utilities leading the laggards by going down 2.12 percent and 1.73 percent, respectively. Communication services bucked the trend by rising 0.85 percent.

U.S. stocks turned lower in afternoon trade on Thursday, with the Dow snapping a historic winning streak. The three major stock indexes trimmed early gains after a news report said the Bank of Japan will discuss tolerating higher domestic bond yields at a policy meeting on Friday.

The Bank of Japan is reportedly going to keep ultra-low interest rates on Friday but may make minor tweaks to extend the lifespan of its yield control policy program, which sent U.S. 10-year Treasury yields above 4 percent, the biggest one-day climb since September.

It doesn't take very much to cause a sell-off or a correction in "an already overbought" U.S. stock market, said Quincy Krosby, chief global strategist for LPL Financial, in an interview with MarketWatch. "At some point something hits the headlines that grabs the market's attention, and investors say let's be more cautious, let's pulled back -- that's probably what's going on right now."

Before the momentum finally ran out in afternoon trade, the stock market initially benefited from the latest batch of economic data on Thursday morning.

Second-quarter U.S. gross domestic product (GDP) rose at a 2.4 percent annual rate, according to the Commerce Department. That was up from a 2 percent growth rate in the first quarter and stronger than market expectation of 1.8 percent, suggesting the economic recovery gaining momentum in the spring.

"After yesterday's resumption of interest rate hikes, it's encouraging to see the aggressive hike cycle working as inflation continues to decline," said Steve Rick, chief economist at TruStage, in an interview with CNBC.

The GDP report has been accompanied by strong corporate earnings from big name companies.

Meta Platforms shares rose 4.40 percent after reporting its highest quarterly sales growth since 2021. McDonald's rose 1.18 percent on stronger-than-expected profit, while Royal Caribbean Group gained 8.72 percent, with the cruise operator reporting second-quarter results that beat analysts' estimates.
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