US stocks extended declines on Thursday as investors grappled with concerns over an interest-rate hike and rising geopolitical risk.
The S&P 500 Index closed down 0.2%, putting the gauge on track to extend declines for a second-straight session and further pulling away from its all-time closing high on Tuesday. Meanwhile, the technology-heavy Nasdaq 100 Index fell 0.4%.
In a speech at an event in Alaska on Wednesday, Federal Reserve Governor Lisa Cook said she would be ready to raise interest rates if inflation does not slow. Thierry Wizman, global FX and rates strategist at Macquarie Group, said this could be a sign that Fed Chairman Kevin Warsh may have to hike rates.
Cook is not usually among the Fed's hawks, Wizman wrote in a note published on Thursday. "If Cook's view reflects the direction of the FOMC's median voter, Kevin Warsh is likely to be dragged into a rate hike, probably in October."
Investors also pored over recent economic data. Applications for US unemployment benefits remained below 200,000 for a third-straight week, underscoring the labor market's resilience. And labor productivity accelerated at a faster-than-expected pace in the second quarter. ALSO READ: AI Chip Stocks Plunge Up To 10% As SanDisk Earnings Fail To Satisfy Sky-High Expectations Productivity accelerating is "good for GDP growth and is suppressing inflationary pressure," said Louis Navellier of Navellier & Associates. Meanwhile, the wait for a deal with Iran and Oman to reopen the Strait of Hormuz continued. The Islamic Republic said an agreement on proposed shipping lanes is in the final stages. However, oil rose as signs indicated that a potential deal between the two would not result in a full-fledged resumption of shipments through the strait. That has tempered some of the optimism of previous days. "Wall Street is reversing again from sharp recent gains, as a lack of clarity over the Strait of Hormuz has investors questioning whether the strong rally at the start of the week was justified by perceived improvements in geopolitical negotiations," said José Torres, senior economist at Interactive Brokers. Memory WoesSandisk Corp. and Western Digital Corp. fell after the memory companies reported results that renewed concerns over the rally in the sector. Disappointing revenue outlooks underwhelmed investors following AI-inflated gains made so far this year, which have placed them among the best performers on the S&P 500. Analysts for Sandisk conceded the current quarter outlook was soft but remained positive about the business's outlook. Meanwhile, Western Digital's performance was said to lag that of peer Seagate Technology Holdings Plc. There are reasons to believe technology stocks were working off an "oversold condition" in the sector's recent bounce rather than adding a "new leg to the bull market," according to Miller Tabak's Matt Maley. Focusing on earnings from Sandisk, Western Digital and D-Wave Quantum Inc., Maley noted the reactions were less to do with selling the news and more about the disappointing numbers. "However, either way, it shows that with the exception of a few stocks, it has been a rough earnings season for the tech sector," said Maley. The disappointment rippled through to Asian memory and storage stocks overnight, and continued the selloff in tech names from Wednesday, which was driven by Advanced Micro Devices Inc. and SpaceX. About $101 billion worth of the latter company's shares become available for trading Thursday, but SpaceX's stock finished 6.1% higher. However, XTB's Kathleen Brooks does not believe the rally coming out of July is over. "We stand by our view that the sell off is short term, and a pause rather than an abrupt shift in direction," said Brooks, who highlighted the performance of SpaceX during the premarket session. "SpaceX is worth watching closely today as it was the worst performer on the Nasdaq 100 on Wednesday, it is also a highly volatile stock, so if it recovers it could be a sign of stronger overall sentiment for the index." ALSO READ: Brent Spikes 4% As Iran-Oman Deal Denies Hormuz Access To US, Israel In single-stock moves, Honeywell Aerospace Inc. slumped 23% after reducing its outlook for the full-year to reflect supply chain issues. Software firms Datadog Inc., Figma Inc. and Hubspot Inc. tumbled after reporting results. Albemarle Corp. advanced as profit came ahead of estimates. Insmed Inc. surged as it boosted full-year revenue expectations for its Brinspuri drug. Sectors in Focus
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