American unemployment claims dent DOW and S&P indexes

A rise in megacap growth stocks offered some support to the technology-heavy Nasdaq.

The Labor Department's report showed the number of Americans filing new claims for unemployment benefits increased by 51,000 to a seasonally adjusted 419,000 in the week ended July 17.

Still, the number likely does not suggest a material shift in labour market conditions, with another month of strong job growth expected in July.

"One data point isn't a trend, and a one-off can probably be chalked up to Delta variant concerns. If jobs data doesn't inflect soon, the markets and the Fed will be put on notice," said Cliff Hodge, chief investment officer at Cornerstone Wealth.

Investors have been closely following the health of the jobs market on which the Federal Reserve's monetary policy hinges, especially after a series of higher inflation readings recently sparked fears about a sooner-than-expected paring of policy support as the economy reopens.

A shift in attention to corporate earnings and the so-called value stocks have helped Wall Street recoup most of its declines from earlier in the week that were triggered by concerns about the fast-spreading Delta variant of the coronavirus.

"The market is realizing that it's very unlikely that this variant is going to have a similar outcome to the original pandemic," said Tom Mantione, managing director at UBS Private Wealth Management in Stamford, CT.

Economically sensitive S&P 500 sectors declined in early trading, with energy dropping 1.2% after rising in the last two sessions. The S&P 500 technology sector was the biggest gainer among the 11 major sector indexes.

The S&P index recorded 29 new 52-week highs and no new lows, while the Nasdaq recorded 42 new highs and 12 new lows.