U.S. stocks took their biggest loss in more than six weeks Thursday as investors reacted to mounting evidence that hiring has slowed down. Energy and health care companies fell sharply, and so did retailers.
Stocks slumped after ADP, a payroll processing company, said private businesses added fewer jobs in June than investors had expected. The losses deepened in afternoon trading.
Bond prices fell and yields jumped, which hurt companies that pay large dividends, such as major drug companies and real estate investment trusts. Retailers sank after L Brands, the parent company of Victoria’s Secret, reported weak sales in June.
The Standard & Poor’s 500 index dropped 22.79 points, or 0.9 percent, to 2,409.75. The Dow Jones industrial average fell 158.13 points, or 0.7 percent, to 21,320.04. The Nasdaq composite sank 61.39 points, or 1 percent, to 6,089.46. The Russell 2000 index, which is comprised of smaller, more U.S.-focused companies, shed 19.33 points, or 1.4 percent, to 1,400.81.
ADP’s survey showed that private U.S. businesses added 158,000 jobs in June, and the firm lowered its estimates for job growth in April and May. The unemployment rate is at 40-year lows, but there isn’t much evidence that wage gains and economic growth are speeding up.
“We were expecting a significantly higher growth rate in the second quarter,” said Memani. “It’s not panning out that way.”
All of the 61 health care companies listed on the S&P 500 lost ground. Biotech drugmaker Amgen declined $2.54, or 1.5 percent, to $171.72 and medical device maker Medtronic lost $1.64, or 1.8 percent, to $87.26.
Drugmaker Merck skidded $1.06, or 1.7 percent, to $63.10 after it stopped two studies of its cancer drug Keytruda as a treatment for multiple myeloma. Merck said more patients who were treated with Keytruda died, and the Food and Drug Administration halted the studies because the risks of a treatment regimen that included Keytruda outweighed the potential benefits.
Bond prices skidded. The yield on the 10-year Treasury note rose to 2.36 percent from 2.33 percent. Investors sold shares of big-dividend stocks, as the rising bond yields made those stocks less appealing to investors seeking income.
Technology companies, which have been in a swoon over the last month, turned lower again. Apple sank $1.36 to $142.73 and Intel dropped 71 cents, or 2.1 percent, to $33.63. Electronic storage company Seagate Technology retreated $1.73, or 4.4 percent, to $37.29.
The VIX, a measurement of how much volatility investors expect, climbed 13 percent to 12.53, although that is still a relatively low level.
Energy companies faded even though fuel prices increased. Benchmark U.S. crude oil rose 39 cents to $45.52 a barrel in New York. Brent crude, used to price international oils, added 32 cents to $48.11 a barrel in London.
Wholesale gasoline added 3 cents to $1.53 a gallon. Heating oil remained at $1.48 a gallon. Natural gas climbed 5 cents to $2.89 per 1,000 cubic feet.
Gold inched up $1.60 to $1,223.30 an ounce. Silver gained 9 cents to $15.98 an ounce. Copper remained at $2.66 a pound.