S&P 500 retreats from 6-week high on weak earnings, recession concerns

The S&P 500 fell Thursday, retreating from a six-week high, after a weak batch of economic data and corporate earnings revived fears of a recession on Wall Street.

The Dow Jones Industrial Average fell 323 points, or 1.02%. The S&P 500 fell 0.7%, while the Nasdaq Composite lost 0.64%.

Those moves come as traders digested disappointing second-quarter results from AT&T, American Airlines and others, as well as poor economic suggesting greater inflationary pressures.

"If overall financial conditions keep tightening on the current path, then that means that macro fair value for US equities will continue to trend lower," said Huw Roberts, head of analytics at Quant Insight.

AT&T dropped 10% after lowering its full-year free cash flow guidance. Still, the telecommunications company exceeded expectations in its second quarter.

American Airlines beat revenue expectations in the second quarter, and forecasted a profit in the third quarter, as consumers continue to travel even with higher prices. Shares fell 7%.

United Airlines reported that it returned to profitability during the second quarter, but results came in below expectations. The stock fell 9%.

Carnival dropped more than 14% after the cruise company announced that it was selling an additional $1 billion of stock.

Meanwhile, Tesla shares jumped 4% after the automaker reported stronger-than-expected earnings but shrinking automotive gross margins. Shares of Alcoa and CSX jumped after the companies beat expectations.

Roughly 18% of S&P 500 have reported earnings for the second quarter. Of those companies, about 71% have beaten expectations, according to FactSet.

On the economic front, initial jobless claims continued their upward trend and touched their highest level since November 2021. Initial claims climbed to 251,000 for the week of July 16, up from an adjusted 244,000 claims from the prior week, in its third straight weekly gain.

Meanwhile, the European Central Bank on Thursday raised interest rates for the first time in 11 years to combat inflation in the euro zone. The central bank raised benchmark rates by 50 basis points.

Thursday's moves come as Wall Street was enjoying a July rebound. All three major averages hit their highest levels in more than a month during Wednesday's session, with the S&P 500 reaching its best closing level since June 9.

The Nasdaq Composite is still set for a gain this week, up about 3.9% for the week. Meanwhile, the Dow is nearly 1.3% higher for the week, while the S&P 500 has gained 2.3% thus far.