Market Shake-Up: Dow's Record Streak Ends

U.S. stocks turned lower as investors moved away from high-priced growth stocks amid second-quarter earnings season. Major indexes fell, with the Dow Jones on track to end its record run. Market volatility heightened as economic data showed softening job markets and rising inflation concerns. Key sectors like healthcare declined.

U.S. stocks took a downward turn on Thursday, reversing early gains as investors continued to pivot away from high-priced megacap growth stocks amid the ongoing second-quarter earnings season. All three major U.S. stock indexes struggled in volatile trading, with the Dow set to end its streak of consecutive record-high closings.

The sell-off came a day after the Nasdaq recorded its steepest one-day drop since December 2022, while the chip sector witnessed its largest daily percentage plunge since the pandemic-induced market turmoil of March 2020. The CBOE Market Volatility index, known as the "fear index," hit its highest level since early May, reflecting heightened anxiety among investors.

"Today is weak across the board," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "With markets near record highs and soft economic statistics, investors are cautious, awaiting earnings reports and guidance over the next couple of weeks." The Russell 2000 dropped for the second consecutive day after soaring 11.5% in five sessions, marking its strongest five-day gain since April 2020.

The Dow Jones Industrial Average fell 432.86 points, or 1.05%, to 40,765.22, while the S&P 500 lost 41.02 points, or 0.73%, to 5,547.25. The Nasdaq Composite declined 141.28 points, or 0.79%, to 17,855.64. Among the S&P 500's 11 major sectors, healthcare experienced the largest percentage drop, and energy and utilities were the only gainers.

Second-quarter earnings season intensified, with 60 S&P 500 companies reporting, 85% of which exceeded expectations. Analysts now predict an 11.1% year-on-year earnings growth for the S&P 500.

Domino's Pizza fell 13.5% due to disappointing quarterly same-store sales, while D.R. Horton exceeded profit estimates and increased home deliveries, resulting in a 10.5% share rise. The Philadelphia SE Housing index reached a record high, boosted by these results. Warner Bros Discovery's shares jumped 4.6% following reports of a potential split between its digital streaming and studio businesses and its legacy TV networks. Netflix is anticipated to release its quarterly earnings after market close.

On the NYSE, declining issues outnumbered advancing ones by a 2.47-to-1 ratio, and on Nasdaq, a 2.88-to-1 ratio favored decliners. The S&P 500 recorded 76 new 52-week highs and two new lows, while the Nasdaq Composite listed 157 new highs and 42 new lows.