Despite also posting better-than-expected quarterly results, Urban Outfitters slid 9.2 per cent after the retailer warned that it expects tariffs will increase pressure on its gross margins in the second half of the year.
Dick’s Sporting Goods fell 5.3 per cent despite reporting second-quarter results that beat analysts’ expectations.
Victoria’s Secret & Co. gave up an early gain and was down 3.6 per cent
Burlington Stores bucked the trend. The retail chain climbed 6.3 per cent after its latest earnings topped analysts’ estimates.
Elsewhere in the market, Spam maker Hormel sank 12.7 per cent for the biggest drop among S&P 500 companies after its earnings fell short of Wall Street’s forecasts and the company cut its outlook for the year.
Traders also had their eye on new government reports on the job market and economy.
The Labor Department reported that applications for unemployment benefits fell last week, the latest sign that employers are holding onto their workers even as the economy has slowed.
The most recent government data suggests hiring has slowed sharply since this spring.
Meanwhile, the Commerce Department reported that US gross domestic product —- the nation’s output of goods and services — grew at a 3.3 per cent annual pace in the April-June quarter after shrinking 0.5 per cent in the first three months of this year due to the fallout from the Trump administration’s trade wars.
The sluggishness in the job market is a key reason that Federal Reserve Chair Jerome Powell signalled last week that the central bank may cut its key interest rate at its meeting next month.
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Lower rates can boost investment prices and the economy by making it cheaper for US households and businesses to borrow, but they risk worsening inflation.
Traders are still betting the Fed will trim its benchmark interest rate at its next meeting in September. Traders see an 85.3 per cent chance that the central bank will cut the rate by a quarter of a percentage point, according to data from CME Group.
Friday will bring another update on inflation: the US personal consumption expenditures index. Economists expect it to show that inflation remained at about 2.6 per cent in July, compared with a year ago. Businesses have been warning investors and consumers about higher costs and prices because of tariffs.
Treasury yields were mixed in the bond market. The yield on the 10-year Treasury slipped to 4.21 per cent from 4.24 per cent late Wednesday. The two-year Treasury yield, which more closely tracks expectations for Federal Reserve action, rose to 3.64 per cent from 3.62 per cent.
