S&P 500 falls slightly from record as investors await Fed summit

The S&P 500 fell slightly Thursday morning, following the benchmark’s rally above the 4,500 level for the first time ever in the prior session, as investors await the Federal Reserve’s annual symposium on Friday.

The S&P 500 and Nasdaq Composite each fell 0.2%. The Dow Jones Industrial Average lost about about 20 points, or 0.06%.

Weekly initial jobless claims came in at 353,000, the Labor Department reported Thursday morning, a slight increase from the prior week’s 349,000. Economists polled by Dow Jones expected 350,000 Americans filed for unemployment last week.

Economic growth totaled 6.6% in the second quarter, according to the Commerce Department’s second estimate Thursday. That was a slight revision upward from the 6.5% annual increase previously reported but slightly lower than the Dow Jones estimate of 6.7%.

The highly anticipated Jackson Hole symposium from the Federal Reserve will be held virtually this year on Friday, with many central bank speakers making remarks to the media beginning Thursday. At the event, central bankers could provide updates on their plan around tapering monetary stimulus.

Esther George, President of the Kansas City Fed, told CNBC Thursday morning that “given the progress we’ve seen,” Fed tapering is “appropriate,” though she didn’t specify when she thinks it should start.

“When you look at the job gains we saw last month, the month before, you look at the level of inflation right now, I think it would suggest that the level of accommodation we’re providing right now is probably not needed in this scenario,” she said. “So I would be ready to talk about taper sooner rather than later.”

James Bullard, St. Louis Fed President, said the central bank should begin those efforts soon and wrap them up by the end of March to prevent the U.S. economy from overheating.

“I think we want to get going on taper. Get the taper finished by the end of the first quarter next year,” Bullard told CNBC Thursday. “And then we can evaluate what the situation is and we’ll be able to see at that point whether inflation has moderated and if that’s the case we’ll be in great shape. If it hasn’t moderated, we’re going to have to be more aggressive to contain inflation.”

Traders were also eying new developments in Afghanistan, where there was an explosion outside of the Kabul airport on Thursday, according to the Pentagon. Three U.S. troops were injured in what appeared to be a suicide bomb, Reuters reported.

Salesforce is leading the Dow, with shares 5% higher on fiscal second-quarter earnings and forward guidance that exceeded analysts’ estimates. Ulta Beauty rose more than 1% after reporting strong results.

Zoom Video shares jumped more than 3.8% after Morgan Stanley upgraded the stock and predicted 18% upside.

Chairman Jerome Powell is slated to make remarks on Friday as part of the Fed’s summit. The Federal Reserve has been purchasing at least $120 billion of bonds per month to curb longer-term interest rates and jumpstart economic growth in reaction to the pandemic.

“Expect investors to keep an eye on the Fed’s symposium the rest of this week for any comments about tapering or timing for interest rate hikes,” said Paulsen. “Either unexpected commentary from the Fed or a failure or success in scaling 4500 could bring additional volatility to the stock and bond markets.”