Dow and Nasdaq fall ahead of Fed news

Jeffries’ David Zervos joins The Exchange to discuss the state of the markets and the larger economy. “What’s the rush?” to buy and sell, he asks Kelly Evans as he previews the Fed taper. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

The S&P 500 fell from a record on Thursday as investors await more details on the Federal Reserve’s plan to pull back on monetary stimulus from the central bank’s annual symposium on Friday.

Traders were also eying new developments in Afghanistan, which added to the risk-off sentiment. At least 11 U.S. Marines and one Navy medic were killed after two explosions went off outside the Kabul airport Thursday, the Associated Press reported.

The Dow Jones Industrial average lost about 134 points, or 0.4%. The S&P 500 retreated by 0.4% and the Nasdaq Composite fell 0.3%. Both the S&P 500 and the Nasdaq Composite closed at records Wednesday with the S&P 500 briefly trading above 4,500 for the first time at one point.

Mixed economic data did little to change the sour mood. Weekly initial jobless claims came in at 353,000, the Labor Department reported Thursday, a slight increase from the prior week’s 349,000 and more than economists expected.

Economic growth totaled 6.6% in the second quarter, according to the Commerce Department’s second reading released on Thursday. That was a slight revision upward from the 6.5% annual increase previously reported, but slightly lower than the Dow Jones estimate of 6.7%.

The highly anticipated Jackson Hole symposium from the Fed will be held virtually this year on Friday, with many central bank speakers making remarks to the media beginning Thursday. At the event, central bankers could provide updates on their plan around tapering the Fed’s monthly bond purchases.

Esther George, President of the Kansas City Fed, told CNBC Thursday morning that “given the progress we’ve seen,” Fed tapering is “appropriate,” though she didn’t specify when she thinks it should start.

“When you look at the job gains we saw last month, the month before, you look at the level of inflation right now, I think it would suggest that the level of accommodation we’re providing right now is probably not needed in this scenario,” she said. “So I would be ready to talk about taper sooner rather than later.”

James Bullard, St. Louis Fed President, said the central bank should begin those efforts soon and wrap them up by the end of March to prevent the U.S. economy from overheating.

“I think we want to get going on taper. Get the taper finished by the end of the first quarter next year,” Bullard told CNBC Thursday. “And then we can evaluate what the situation is and we’ll be able to see at that point whether inflation has moderated and if that’s the case we’ll be in great shape. If it hasn’t moderated, we’re going to have to be more aggressive to contain inflation.”

Salesforce is leading the Dow, with shares 4% higher on fiscal second-quarter earnings and forward guidance that exceeded analysts’ estimates. Another cloud company, NetApp, added more than 5%.

Zoom Video shares jumped more than 1.6% after Morgan Stanley upgraded the stock and predicted 18% upside.

Shares of discount retailers Dollar Tree and Dollar General dropped 11% and 4%, respectively, after reporting quarterly results. Abercrombie & Fitch tumbled 10.5% as supply chain constraints and delayed back-to-school purchases hurt sales.

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