finance

Dow Pulls Back More Than 150 Points After Reaching 30,000 Milestone

CNBC

The Dow Jones Industrial Average fell on Wednesday, taking a breather after reaching a significant milestone, while traders pored over disappointing unemployment data.

The 30-stock Dow slid about 173.77 points, or 0.6%, to 29,872.47. The S&P 500 dipped 0.2%, or 5.76 points, to 3,629.65 after reaching an all-time closing high in the previous session. The Nasdaq Composite outperformed, rising 0.5%, or 57.62 points, to 12,094.40.

Trading volumes were lighter than usual ahead of the Thanksgiving holiday. The SPDR S&P 500 ETF Trust (SPY) traded more than 33 million shares, less than half its 30-day average volume of 79.3 million.

The Labor Department said that 778,000 people filed for unemployment benefits for the first time last week. Economists polled by Dow Jones expected initial jobless claims to come in at 733,000.

"There was building evidence that claims were going to hit a near-term bottom and the downward momentum (which was already slowing) that had been intact for months would reverse," wrote Thomas Simons, money market economist at Jefferies. "The data of the past two weeks emphatically confirms these expectations."

Salesforce led the Dow lower, falling more than 5% after Dow Jones reported the company held talks to buy Slack Technologies. CNBC later confirmed the report. Shares of Slack popped more than 37%. Energy fell 2.4% and was the worst-performing sector in the S&P 500.

Dow 30,000

The Dow broke above 30,000 for the first time on Tuesday, rallying more than 400 points. The Dow is on pace for its biggest monthly gain since 1987, up more than 12%.

"The Dow passing 30,000 represents the achievement of an arbitrarily-set milestone, but it also captures the sentiment of the moment for investors," said Scott Knapp, chief market strategist at CUNA Mutual Group.

Small caps were also coming off a record high, with the Russell 2000 surging nearly 2% on Tuesday. For the month, the Russell is up around 20%, which would be its best-ever monthly performance. On Wednesday, however, the small-cap benchmark dipped 0.5%.

The market's rally to record highs comes amid positive vaccine news coupled with increasing political clarity.

Earlier this week, AstraZeneca said an early analysis showed its vaccine candidate had an average efficacy of 70%. Meanwhile, the Trump administration made federal resources available to President-elect Joe Biden's team for his transition into office. Traders have also cheered the prospects of former Federal Reserve Chair Janet Yellen potentially being nominated for Treasury secretary.

Peter Cardillo, chief market economist at Spartan Capital Securities, said further gains could be limited, however.

"A lot of future positive news regarding the economy and the virus has already been discounted," he said. "The market can keep going higher from here ... but not by too much."

Elsewhere, the Federal Reserve released the minutes from its meeting earlier this month. That summary showed Fed officials discussing ways of providing more accommodation to the economy as the recovery from the coronavirus pandemic continues.

"The staff also continued to view the risks to the economic outlook as tilted to the downside, with the latest data suggesting an increased probability of a resurgence in the disease," the minutes said.

— CNBC's Yun Li contributed reporting.

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