Stocks fall on jobless claims, inflation worries

Stocks posted modest losses on Thursday as investors had little reason to buy stocks with discouraging economic data and a steady rise in bond yields, which has started to raise concerns about inflation.

The S&P 500 index dropped 17.36 points, or 0.4 percent, to 3,913.97. It was the third straight decline for the index. The Dow Jones Industrial Average lost 119.68 points, or 0.4 percent, closing at 31,493.34 and the technology-heavy Nasdaq Composite fell 100.14 points, or 0.7 percent, to 13,865.36. The Russell 2000 of small companies fell 1.7 percent, a significant drop for that index.

Energy prices declined for a second day, as the frigid temperatures that impacted Texas and much of the Midwest moved east. Natural gas prices closed down 4.3 percent. Energy prices have been volatile the past week as record demand for natural gas and other fossil fuels to warm homes has caused electricity prices to skyrocket. Natural gas is typically used as an “on-demand” fuel source.

Bond yields continue to climb, as murmurs of inflation have started among investors and as the economy continues to climb out of the hole that was created by the pandemic. The yield on the 10-year U.S. Treasury note was at 1.29 percent, nearly double where it was last fall. It’s now trading at levels seen before the March 2020 pandemic shutdowns.

The climb in bond yields has multiple impacts on the market. When bonds pay higher yields, they are more attractive to a broader group of investors, who tend to move money out of low-performing or low dividend-paying stocks and into the steady income of bonds.