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The S&P 500 lost 0.54%, while the Nasdaq Composite fell 1.31% and the Dow Jones Industrial Average slumped 0.41%.
The U.S. Labor Department reported that 1.4 million people filed for unemployment insurance for the week ended July 18, up 109,000 from the prior week and above economists’ estimates of 1.3 million.
‘The surge of Covid cases in the Sun Belt and the stalling out of reopening activities in other states has seemingly caused another round of layoffs that has stymied the nascent labor market recovery,’ Jefferies (NYSE:JEF) said in a note.
The number of confirmed U.S. coronavirus cases neared 4 million, according to Johns Hopkins data, the most in the world.
Investor sentiment was dealt a further blow as Republicans confirmed the payroll tax cut would not form part of the coronavirus fiscal package.
The weakness in the broader market was led by tech as some on Wall Street expressed concerns whether the rally in the sector has been too much, too fast.
Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB) and Microsoft (NASDAQ:MSFT), the so-called Fab 5, making up about 20% of the S&P 500 index, drifted lower.
Microsoft fell 2% after its guidance fell short of consensus estimates and overshadowed better-than-expected quarterly results.
Tesla (NASDAQ:TSLA), meanwhile, reversed gains to trade lower despite rolling blowout earnings for the second-quarter and retaining initial guidance to deliver over 500,000 vehicles for the year.
Twitter reported quarterly results that beat on both the top and bottom lines, underpinned by a 34% jump in daily active users. Its shares jumped 6.5%.
Elsewhere on the earnings front, Las Vegas Sands (NYSE:LVS) dropped wider losses and revenue below Wall Street estimates, sending its shares more than 4% lower.