By Victor Reklaitis and Mark DeCambre, MarketWatch
Twitter's stock soars after quarterly results
U.S. stock benchmarks traded lower on 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?
Dow Jones Industrial Average fell 171 points, or 0.7%, to 24,718. A slump in shares of Home Depot Inc. (>> Home Depot (The)) and Caterpillar Inc.(>> Caterpillar) combined to exact a 36 point toll from the blue-chip benchmark. The S&P 500 index traded 12 points, or 0.5%, lower at 2,672, weighed by declines of at least 0.7% in financial and industrials stocks.
The Nasdaq Composite Index , meanwhile, gave up 17 points, or about 0.2%, to 7,034, relinquishing a slightly higher open for the technology-laden gauge.
On Wednesday, the Dow closed 0.1% lower, the S&P 500 lost 0.9%, and the Nasdaq Composite shed 0.9%.
The three gauges are down between 2.5% and 2.9% for the week as of Wednesday's close, after tumbling Monday , rallying Tuesday and suffering modest losses Wednesday . The Dow has cut its 12-month gain to 24%.
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%.
"While yesterday's moves were slightly more orderly, it appears to be far from clear that the recent increase in volatility has subsided," said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
What could help drive 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.
Three other Fed officials are scheduled to speak later. Philadelphia Fed President Patrick Harker was set to address the economic outlook and the impact for colleges at 8 a.m. Eastern in New York City, while Minneapolis Fed President Neel Kashkari will participate in a discussion at the chamber of commerce for Pierre, S.D., at 9 a.m. Eastern.
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 look like key movers?
Shares in Tesla Inc.(>> Tesla) fell 1.8%. 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 traded off by 0.2% after the media company reported better-than-anticipated earnings late Wednesday.
Shares of Twitter Inc.(>> Twitter Inc)soared 24% trading Thursday after the microblogging company delivered better-than-expected financial results and reported its first-ever quarter of GAAP 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 2.7%, in early action.
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 27% after the company reported better-than-expected revenue. Shares of Yum were up 1.2% in recent trade.
Teva Pharmaceutical Industries Ltd. shares (>> Teva Pharmaceutical Industries Ltd (ADR))plummeted by about 13% Thursday 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 moved down, with U.K. stocks 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.
Asian markets mostly finished with gains .
The yield on 10-year Treasury notes was at 2.87%, adding to gains from late Wednesday .
Gold futures edged slightly higher, as the metal tries to avoid its fifth straight decline as the dollar slips and as the 10-year yield rose. Meanwhile, crude-oil futures were lower, as the ICE U.S. Dollar Index gained.
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