The US markets closed lower on Thursday, as selling in technology shares offset an advance in the energy sector. A second round of US-China trade talks in Washington was in the foreground, kicking off on Thursday. However, President Donald Trump cast some doubt on a positive outcome for the pair of superpowers attempting to resolve their trade differences after he said Beijing had become too spoiled and that his expectations for the negotiations were low. Dallas Fed President Robert Kaplan said that the US economy has reached the threshold for maximum employment and it may already be lower than is sustainable. Kaplan is currently in favor of two more interest rate rises this year, in line with Fed policymakers' median estimate. On the economy front, the rate of layoffs in the US rose in early May to the highest level in a month, but so-called initial jobless claims are still near the lowest levels in half a century. Initial jobless claims rose by 11,000 to 222,000 in the week ended May 12. The more stable monthly average of claims, meanwhile, fell by 2,750 to 213,250. For the second week in a row these claims were at the lowest level since 1969. The number of people already collecting unemployment benefits, known as continuing claims, fell by 87,000 to 1.71 million. The last time fewer people were receiving jobless benefits was in 1973. Job openings are at a record high, unemployment is unusually low at 3.9% and most companies are still hiring nine years after an economic recovery got under way.
Meanwhile, the Conference Board said its leading economic index advanced 0.4% in April, with March's gain upwardly revised a tick also to show a 0.4% advance. The index hasn't declined on a monthly basis in nearly two years. In the six-month period ending April 2018, the leading economic index increased 3.3%. Of the 10 components that make up the leading index, eight advanced, with the average workweek for manufacturing production workers and the interest rate spread between the 10-year Treasury and the federal-funds rate leading the way, and the ISM new-orders index close behind. Only building permits and stock prices were negative.
Separately, the Philadelphia Fed manufacturing index jumped to 34.4 in May from 23.3 in April. That was well above the economist consensus for a reading of 21 and the highest reading in a year. Readings for new orders soared in May, rising to 40.6 from 18.4. That is the highest reading since March 1973. The shipments index inched up to 25.8 from 23.9 in April. Price indexes suggested continued inflation pressures. The prices received index, reflecting manufacturers' own prices, increased 7 points to a reading of 35.4, the highest since February 1989.
The Dow Jones Industrial Average lost 54.95 points or 0.22 percent to 24,713.98, the Nasdaq dropped 15.822 points or 0.21 percent to 7,382.47, and the S&P 500 was down by 2.33 points or 0.09 percent to 2,720.13.