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US markets closed lower; S&P, Dow log worst one-day decline

The US markets closed lower on Thursday, with the S&P 500 and Dow industrials logging their worst one-day declines since May, as the technology sector resumed its selloff, overshadowing advances in financials. St. Louis Federal Reserve chief James Bullard said that the US Federal Reserve needs solid data to maintain a monetary policy that diverges from the world's other major developed economies. Bullard added that it was disconcerting that market measures of inflation in the world's largest economy had fallen despite the central bank raising interest rates twice so far this year. Bullard, who does not currently vote in the US Federal Reserve's rate-setting committee and is more dovish than many of his peers, questioned how long the Fed could continue on its tightening path while other central banks were still keeping policy easy. Bullard said he was concerned investors appeared to doubt the Fed's ability to generate price growth. Rather than hiking rates further, Bullard said the Fed's natural next step should be to trim its balance sheet -- a process that could take at least five years.

On the economy front, the US economy didn't perform all that badly in the first three months of 2017, growing twice as fast as the government originally reported. Gross domestic product, the official scorecard for the economy, expanded at a 1.4% annual pace in the first quarter, revised figures show. The economy saw little change amid a switchover from the Obama administration to the Trump White House. The US grew 2.1% at the end of 2016. The US has been growing close to 2% annually during most of the current eight-year-old recovery, showing little sign it's about to rapidly speed up - or slow down. The improved first-quarter GDP report stems mostly from stronger exports and an increase in what consumers spent on health care and financial services.

Meanwhile, the number of Americans applying for unemployment benefits rose slightly in late June but still remained extremely low, reflecting the strength of a US labor market that shows no sign of wilting. Initial jobless claims in the period running from June 18 to June 24 rose by 2,000 to a seasonally adjusted 244,000. Initial claims count people who apply for benefits after losing their jobs. New applications for benefits have been under 300,000 for 121 straight weeks, the longest run since the early 1970s. The average of new claims over the past month, which gives a more accurate picture of layoff trends, fell by 2,750 to 242,250. The number of people already collecting unemployment checks, meanwhile, registered fewer than 2 million for the 11th straight week. The last time so-called continuing claims were consistently under 2 million was in 1973.

The Dow Jones Industrial Average lost 167.58 points or 0.78 percent to 21,287.03, Nasdaq dropped 90.06 points or 1.44 percent to 6,144.35, while S&P 500 edged lower by 20.99 points or 0.86 percent to 2,419.70.

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