By Sue Chang and Mark DeCambre, MarketWatch
Twitter's stock soars after quarterly results
U.S. stock benchmarks retreated again Thursday as Wall Street tangled with further volatility, with concerns about rising inflation and bond yields weighing on investor's psyche against the backdrop of a relatively healthy domestic economy.
Strategists and traders have mostly pinned the recent selling in part to rising bond yields amid signs of inflation. But they have also noted that equities were due for a pullback after scoring big gains in January and throughout 2017.
What are the main benchmarks doing?
The Dow Jones Industrial Average fell 539 points, or 2.2%, to 24,354. The S&P 500 index dropped 47 points, or 1.7%, to 2,634, weighed by financial and industrials stocks.
The Nasdaq Composite Index shed nearly 130 points, or 1.8%, to 6,924.
On Wednesday, the Dow closed 0.1% lower, the S&P 500 lost 0.9%, and the Nasdaq lost 0.9%. The three gauges are down about 4%, after tumbling Monday , rallying Tuesday and suffering modest losses Wednesday .
What are strategists saying?
Crista Huff, chief analyst at Cabot Undervalued Stocks Advisor, said she expects the S&P 500 to bounce between a range of 2,600 and 2,900 for the next few months as the recent pullback in the market gets digested.
"I think that during the next few weeks or two months the stock market will bounce between that entire range, and if it feels like it's getting away from you, relax and just keep buying on the low days because it will come back," she said.
"The market just had a huge run-up since the 2016 general election and it was due for a correction and it can't just do that in a few days," Huff said. A correction is usually defined as a pullback from a recent peak of at least 10%.
"It is not uncommon for markets to be topsy-turvy after a recent severe selloff. Traders are still testing the water and they are half expecting another sudden selloff. Investors love to pick up cheap stocks, but when they fear another sharp decline is on the horizon their default position can be to look to so-called safe haven assets like gold and bonds," said David Madden, a market analyst at CMC Markets.
What's driving markets?
Political worries might pressure the market somewhat, as a partial shutdown of the federal government lies ahead if lawmakers don't agree on spending measures by midnight.
Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer unveiled an agreement Wednesday. The deal faces a bumpy path in the House , where Republicans will need Democrats' help to pass it, since conservatives will likely object to a big increase in government spending.
What's on the economic docket?
Initial U.S. jobless claims fell by 9,000 to 221,000 in the seven days ended Feb 3. Economists surveyed by MarketWatch forecast a 235,000 reading.
Check out:MarketWatch's Economic Calendar
The recent correction in financial markets is healthy and is unlikely to hurt financial conditions or the broader U.S. economy, Dallas Federal Reserve President Robert Kaplan said early Thursday (https://www.wsj.com/articles/market-correction-is-healthy-says-feds-kaplan-1518011212?mod=mktw) at an event in Germany.
Minneapolis Fed President Neel Kashkari said the Federal Reserve is "a long way away " from having to raise interest rates due to higher inflation on the back of higher labor costs. Speaking at a moderated discussion in Pierre, South Dakota, Kashkari said the January jobs report, which was blamed for the stock market selloff, was actually only "mixed" in terms of wage growth.
Kansas City Fed President Esther George is due to give a speech on the economic outlook to a business group in Wichita, Kan., at 9 p.m. Eastern.
Which stocks are making big moves?
Shares in Tesla Inc.(>> Tesla)fell 3.7%. The maker of electric cars late Wednesday posted a narrower-than-expected adjusted loss for the fourth quarter.
21st Century Fox Inc.(>> 21st Century Fox) shares slid 0.6% after the media company reported better-than-anticipated earnings late Wednesday.
Shares of Twitter Inc.(>> Twitter Inc) soared 17% after the microblogging company delivered better-than-expected financial results and reported its first-ever quarter of profitability.
Rice Krispies producer Kellogg Co.(K) reported fourth-quarter net income of $428.0 million, or $1.23 per share, compared with a loss of$53.0 million, or 15 cents per share, for the same period last year. Its shares were up 2.8%.
Yum Brands Inc.(>> Yum Brands) and Grubhub Inc. (>> GrubHub Inc) said Thursday they have entered a partnership in the U.S. aimed at driving online sales and delivery to Yum's restaurants, including KFC and Taco Bell. Meanwhile, Grubhub's stock gained 3.7% after the company reported better-than-expected revenue . Shares of Yum were down 0.5%.
Yum China Holdings Inc.(>> Yum China Holdings Inc) shares were down 4.8% after the company reported a fourth-quarter loss related to a one-time charge related to the U.S. tax cuts.
Teva Pharmaceutical Industries Ltd. shares (>> Teva Pharmaceutical Industries Limited)plummeted by about 9.3% after the company reported fourth-quarter profit and revenue beats but provided 2018 guidance that fell well short of expectations.
What are other assets doing?
European stocks fell, with U.K. stocks lower after the Bank of England held interest rates unchanged but said interest rates may go up sooner than previously expected . In its quarterly inflation report, the U.K. central bank lifted its 2018 economic growth forecast to 1.8% from 1.6%, saying U.K. trade is benefiting from a strong global upswing.
In contrast, Asian markets mostly finished with gains .
The yield on 10-year Treasury notes was at 2.85% and traded above 2.80% all session.
Gold futures edged slightly higher, as the metal tries to avoid its fifth straight decline. Crude-oil futures were lower, while the ICE U.S. Dollar Index was mostly flat.
--Victor Reklaitis contributed to this report
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