Stocks closed firmly lower Thursday following a choppy start, as rumors of a possible French sovereign debt downgrade and a batch of mixed U.S. data overshadowed improving corporate earnings.
Global markets sold off early on rumors that Moody's Investors Service Inc. might be poised to cut France's rating. Traders cited a research note released Wednesday by Citi analysts who claimed Moody's would put France's triple-A rating on review for a possible downgrade by the autumn. French officials quickly dispelled the downgrade talk.
Meanwhile, a slew of economic data sent mixed signals to investors. Factory activity in the Mid-Atlantic region slowed sharply in April and existing home sales fell for a second straight month in March. Other data showed more Americans than expected filed for jobless benefits last week, while a gauge of future U.S. economic activity rose in March to its highest level in nearly four years.
Corporate earnings, on the other hand, have been solid. The favorable 79 percent beat rate and increase in the number of sectors posting year-over-year increases has been a relief to U.S. equity markets, Sam Stovall, chief equity strategist at Standard and Poor's, wrote in a note to clients.
Notable earnings to watch after the market close include Microsoft Corp. (Nasdaq: MSFT), Chipotle Mexican Grill Inc. (NYSE:CMG), Capital One Financial Corp. (NYSE: COF) and SanDisk Corp. (Nasdaq: SNDK).
Stocks. The benchmark S&P 500 index lost 8.23 points, to end at 1,376.91. The Dow Jones Industrial Average gave up 62.03 points, to 12,970.72. The tech-heavy Nasdaq Composite dropped 22.84 points, to 3,008.61. European markets declined, while Asian bourses ended mixed.
Bonds. Treasury prices remained firm after the sale of $16 billion in five-year inflation-protect bonds at a record low negative yield. The yield on the benchmark 10-year Treasury note fell 3 basis points to 1.95 percent. Results of a Spanish debt auction failed to ease concerns that Spain could be the next European country in need of a bailout. Yields on the Spanish 10-year bond once again marched towards the 6 percent mark.
Currencies. The U.S. dollar slipped against the euro but rose against the Japanese yen. The ICE dollar index, which measures the greenback against a basket of major currencies, was near flat at 79.58. The Indian rupee, the Brazilian real and the Swiss franc fell.
Commodities. Gold futures ended a lackluster Thursday session slightly higher, at $1,641.40 an ounce, while silver ticked up 0.9 percent, to end at $31.78 an ounce. Crude oil extended losses, retreating 0.4 percent, to $102.27 a barrel. Natural gas settled at its lowest in more than 10 years, off 2.3 percent. Agricultural commodities rose.