The Dow industrials on Thursday ended a streak of all-time closing highs at seven and snapped a nine-day string of gains, as a hot equity market cooled ahead of key central-bank meetings.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.76% shed 77.80 points, or 0.6%, to close at 18,517.23, dragged lower by a 4% drop in shares of Intel Corp . /zigman2/quotes/203649727/composite INTC -0.16% . The seven-day string of record closing highs and nine-day outright win streak were the longest such runs since March 2013.
The S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.33% retreated from Wednesday’s record close to finish down 7.85 points, or 0.4%, to 2,165.17. A 1% decline in industrials and a 0.9% fall in energy made those sectors the worst performers among the S&P 500’s 10.
Meanwhile, the tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.41% closed off 16.03 points, or 0.3%, at 5,073.90.
It’s a “normal” pullback in response to the extended gains, said Paul Nolte, portfolio manager at Kingsview Asset Management, who predicted that it wouldn't be unusual to see the market drop another percent or two.
Despite Thursday’s decline, recent gains for stocks have put the three main indexes in position to record their biggest monthly gains since March. The Nasdaq Composite is on track to log a 4.8% gain in July, the Dow is looking at a 3.3% advance and the S&P 500 is on pace for a 3.2% monthly rise, according to FactSet data.
Casey Clark, vice president of investment strategy research at Glenmede, said investors are taking a break ahead of a busy week for central banks.
“It’s a wait-and-see period with next week shaping up to be the most important for this summer,” said Clark.
At least 15 central banks are scheduled to hold policy meetings in the next few days with the Federal Reserve’s Federal Open Market Committee conference set for July 26-27. The Bank of Japan will meet on July 29.
The Fed is widely expected to hold rates unchanged, but policy makers may hint at a rate increase in coming months, possibly as soon as September. Shifting rate-hike expectations can influence the recent trend for stocks.
“The conversation about the Federal Reserve is also coming back with expectations for a rate increase in September shifting higher. Equities are likely to have a harder time to climb further in this environment,” said Mark Kepner, managing director of sales and trading at Themis Trading.
There have also been mounting speculation that the BOJ could unleash further stimulus measures as officials continue to seek the right mix of policies to bolster the economy.
Meanwhile, the European Central Bank held rates unchanged Thursday and emphasized that it intends to keep rates at current or lower levels for an “extended period” and that its program of monthly bond buys would run until at least March 2017, and possibly beyond.
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