* Declines in big tech-related firms pressure Nasdaq, S&P
500
* Walmart slides as tepid outlook overshadows upbeat Q4
sales
* Facebook shares slip on news blackout move in Australia
(Adds closing prices)
By Herbert Lash
NEW YORK, Feb 18 (Reuters) - Stocks on Wall Street closed
lower on Thursday as investors shifted out of big technology
names, while an unexpected rise in weekly U.S. jobless claims
pointed to a fragile recovery in the labor market.
Shares of Apple Inc AAPL.O , Tesla Inc TSLA.O and
Facebook Inc FB.O weighed the most on both the benchmark S&P
500 .SPX and the tech-heavy Nasdaq .IXIC .
Facebook shares dropped 1.5% to $269.39 as Wall Street
assessed the wider ramifications of its move to block all news
content in Australia. The Dow Jones Industrial Average .DJI fell 119.68 points,
or 0.38%, to 31,493.34, the S&P 500 .SPX lost 17.36 points, or
0.44%, to 3,913.97 and the Nasdaq Composite .IXIC dropped
100.14 points, or 0.72%, to 13,865.36.
Volume on U.S. exchanges was 13.13 billion shares.
Strong earnings, progress in the vaccination rollout and
hopes of a $1.9 trillion federal stimulus package helped U.S.
stock indexes again hit record highs at the start of the week.
But the months-long rally suggests stocks now have high
valuations, said Jason Pride, chief investment officer for
private wealth at Glenmede in Philadelphia.
"We are still in the cautiously bullish environment for the
market on the whole," Pride said, citing two reasons.
"We're going to get a vaccine-induced economic recovery,
that's No. 1. The flip side of that story is the markets have
largely priced that in and driven themselves to over-valued
territory. Markets are going to struggle with that," he said.
Concerns over a rising inflation outlook have pushed
investors to book profits on stocks with high valuations in the
S&P 500 technology .SPLRCT and communications services
.SPLRCL sectors, which have underpinned a 76% rise in the S&P
500 .SPX since its March 2020 lows. Peter Essele, head of portfolio management at Commonwealth
Financial Network in Boston, said there was a lot of irrational
exuberance built into stock prices heading into this year.
"We started to enter an environment where risk actually
became a factor once again and notably, inflationary risk," he
said. "Now it's a question of whether the fundamentals are going
to match the level of prices that currently exist."
A Labor Department report showed initial claims for state
unemployment benefits rose to 861,000 last week from 848,000 the
prior week, partly due to potential claims related to the
temporary closure of automobile plants due to a global
semiconductor chip shortage. Of the 11 major S&P 500 sectors, only utilities .SPLRCU
and consumer discretionary .SPLRCD rose, while real estate
.SPLRCR barely fell, off 0.02%.
Walmart Inc WMT.N slid 6.5% to $137.66 after the world's
largest retailer missed quarterly profit estimates and predicted
a low-single digit rise in fiscal 2022 net sales. "We're getting mixed readings. Strong retail sales and then
lousy claims. We're going to see that probably for the rest of
this quarter," said Jack Ablin, chief investment officer at
Cresset Capital Management in Chicago.
"Even the Walmart story wasn't that bad on the surface;
they're going to make more investments," Ablin said.
Walmart has invested heavily in online advertising and
healthcare businesses over the past year, using pandemic-led
sales momentum to diversify beyond brick-and-mortar retail.
Marriott International Inc MAR.O rose 0.5% to $131.98
after reporting a quarterly loss as the hotel chain's bookings
declined due to pandemic-induced travel restrictions.
Declining issues outnumbered advancing ones on the NYSE by a
2.30-to-1 ratio; on Nasdaq, a 2.53-to-1 ratio favored decliners.
The S&P 500 posted 15 new 52-week highs and no new lows; the
Nasdaq Composite recorded 104 new highs and 17 new lows.