Dow industrials tumble more than 400 points as stock market gives up early gains in September’s final session

How are stock-index futures trading?

• The Dow Jones Industrial Average DJIA, -1.35% declined 439 points, or 1.3%, lower to 33,950.
• The S&P 500 index SPX, -0.84% was 0.9% lower at 4,320.
• The Nasdaq Composite Index COMP, -0.13% fell 0.3% to 14,463.

For the month, the Dow was headed for a 2.4% decline, the S&P 500 was down 3.2% and the Nasdaq Composite was off 4.3%. For the quarter, the Dow was flat, the S&P 500 was up 1.9% and the Nasdaq Composite was up 0.8%.

What’s driving the market?

Sentiment on Thursday was souring quickly on Wall Street, even as hopes were growing that the government would avert a shutdown as a midnight deadline approaches for funding operations.

Congress was preparing Thursday to pass legislation extending government spending through Dec. 3 and avert a shutdown. That effort comes as the House aims to pass a roughly $1 trillion infrastructure bill already passed by the Senate but which may be in doubt as Democratic factions are threatening to block the bill unless moderate members sign on to supporting a separate, broader bill focused on climate change, education, and healthcare.

The drop in stocks was in motion even as bond yields eased again with the 10-year Treasury TMUBMUSD10Y, 1.515% slipping 2.5 basis point to around 1.52%. The U.S. dollar, meanwhile, which has been in the spotlight as it charged to its highest level in about a year was steadying at 94.29, at last check.

Investors were digesting fresh comments from Fed Chairman Jerome Powell, as he testifies to a House panel on COVID relief, along with Treasury Secretary Janet Yellen.

The Treasury Secretary at Thursday’s hearing reiterated that a failure to raise the debt limit would have catastrophic implications for markets and the U.S. economy.

Several other government officials are set to speak Thursday, including Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, Chicago Fed President Charles Evans and St. Louis Fed President James Bullard.

On the data front, the number of people who applied for U.S. unemployment benefits in late September rose to a two-month high, but much of the increase took place in California. New jobless claims paid traditionally by the states rose by 11,000 to 362,000 in the seven days ended Sept. 25, the government said Thursday.

Economists polled by The Wall Street Journal had estimated new claims would total a seasonally adjusted 330,000.

“Though jobless claims ticked up yet again, weekly labor market data can be tricky to digest just because there is a lot of it and it’s certainly bounced around a lot throughout the pandemic,” wrote Mike Loewengart, managing director investment strategy at E-Trade Financial, in emailed remarks.

“The end of Federal pandemic unemployment benefits earlier in the month also likely drove an increase in filings for state benefits. So the market may take this one piece of the data in stride as we wait for the reads next week, especially since the big ticket item right now is the debt ceiling,” Loewengart wrote.

Meanwhile, an updated reading of second-quarter growth showed that the U.S. economy grew at a 6.7% annual pace, as the U.S. got a big jolt in the spring from government stimulus payments and coronavirus vaccines allowed businesses to reopen. The rise in consumer spending was slightly faster at 12% and exports were revised to show a 7.6% increase instead of 6.6%

Separately, a measure of business conditions in the Chicago region slipped in September to the lowest level in seven months, a trade group said Thursday. The Chicago Business Barometer, also known as the Chicago PMI, slowed to 64.7 in September from 66.8 in the prior month. The index has been moderating from a record high of 75.2 in May.

Which companies are in focus?

• Virgin Galactic Holding Inc. SPCE, +11.58% shares are up 14%, after the space-tourism company announced the end of an Federal Aviation Administration probe into its test flight with founder Richard Branson on board.
• CarMax Inc. KMX, -10.58% shares traded 11% lower after the car retailer reported a 4% drop in second-quarter net income to $1.72 a share, which fell short of Wall Street expectations.
• Boeing BA, -2.45% was down 1.5%, even as Bernstein analysts upgraded the company and Spirit Aerosystems Holdings Inc. SPR to outperform on Wednesday and said they expect international traffic and aircraft demand to start to improve as COVID-19 vaccines begin to be administered in most major markets.
• Goldman Sachs GS, -1.97% was down by 1%, with the financial services company weighing on the Dow industrials, along with a 0.9% decline in home-improvement retailer Home Depot Inc. HD, -2.69%.
• Bed Bath & Beyond BBBY, -21.89% slumped after the retailer reported fiscal second-quarter profit and sales that missed expectations and gave guidance below Street consensus.
• Facebook FB, -0.04% shares fell just into the red midday as the social media giant faced its long-awaited grilling on Capitol Hill with elected officials teeing off on executives for failing to protect kids on its platform, one day after its former security chief tweeted that “Young teens shouldn’t be on social media.”

How are other assets trading?

• The 10-year Treasury note TMUBMUSD10Y, 1.515%  was yielding 1.54% little changed from its Wednesday level.
• The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was flat, holding at 94.319, the highest level in about a year.
• Oil futures eased back, with the U.S. benchmark CL00, +0.33% dropping 1.7% to $73.49 a barrel, while international benchmark Brent BRN00, +0.36% declined 1.5% to $76.97.
• In European equities, the Stoxx Europe 600 index SXXP, -0.05% traded 0.2% lower and the FTSE 100 index UKX, -0.31% pulled back 0.3%. In Asia, the Nikkei 225 index NIK, -0.31% slipped 0.3%, the Hong Kong Hang Seng Index HSI, -0.36% slipped 0.3% and China’s CSI 300 index 000300, +0.67% rose 0.6%.