U.S. stocks closed Thursday’s trading session lower as a lack of resolution on Greece debt talks and declining transports weighed on investor sentiment.
The Dow transports resumed their decline, falling 0.91 percent. U.S. stocks have alternated between losses and gains in the last three trading days.
“Airlines have taken a major hit this month because of the overcapacity situation,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Funds.
Regarding Greece, IMF Managing Director Christine Lagare told a German newspaper that a Greek exit from the euro zone was possible but that this would probably not herald the end of the euro currency.
She said such a step would “not be a walk in the park” but would “probably not” mean the end of the euro. European equities closed flat to lower on Thursday.
On Wednesday, both U.S. and European equities rallied after Greece said it had stated crafting a “staff level agreement” with its international bailout supervisors.
However, European officials rebuked the claims on Thursday, saying there was some way to go before any agreement could be drawn up and that they were surprised by the upbeat sentiment from Greece.
The Greek government’s spokesman still said a deal should be reached by Sunday, Reuters reported.
“Until they get that situation resolved, it will linger out there as a question mark,” said Robert Pavlik, chief market analyst at Boston Private Wealth. He added that he expects some sort of agreement to be struck between Greece and its creditors.
The Dow Jones Industrial Average closed down 36.87 points, or 0.20 percent, at 18,126.12, with Caterpillar leading laggards and Intel and DuPont the greatest advancers. Thursday’s session also marked the fourth time in six sessions where blue chips closed down.
The S&P 500 closed down 2.68 points, or 0.13 percent, at 2,120.80, with industrials and energy leading decliners and materials leading three advancers.
The Nasdaq closed down 8.62 points, or 0.17 percent, at 5,097.98.
Earlier, investors remained cautious following China stocks plunging 6.5 percent on Thursday, with traders citing the tightening of marginal lending rules as an explanation. Despite the selloff, the Shanghai Composite is still up more than 40 percent year-to-date.
Meanwhile, U.S. officials were at the Group of Seven (G-7) meeting of finance ministers and central bank chiefs in Dresden, Germany, on Thursday, which will continue until Friday. Greece is on the agenda, as well as reviving global growth.
The dollar hit a nearly 13-year high against the yen before trading around 123 yen. The euro traded above $1.09.
“I think it’s not so much that something’s changed than more a function of the strength of those currencies,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. He noted that better-than-expected, although not robust, economic data “was enough to stem the decline in the dollar.”
At the Treasury market, the benchmark 10-year yield was near 2.13 percent, while the 2-year yield was 0.61 percent.
The Treasury Department sold $29 billion in seven-year notes at a high yield of 1.888 percent on Thursday. The bid-to-cover ratio, an indicator of demand, was 2.49 and the best since January.
“In trying to glean some message from the results, there wasn’t much of any. As I stated yesterday, the yield curve now seems to be gyrating between tightening on the long end when participants think the Fed will drag their feet with the first rate hike and flattening on hints that they might not wait much longer,” Peter Boockvar, chief market analyst at The Lindsey Group said in a note following the sale.
Weekly initial jobless claims came in at 282,000, up slightly from last week’s 274,000 read.
Pending home sales rose 3.4 percent in April, their highest in 9 years.
“We’re getting some confirming signals that the housing market is getting better,” said Maris Ogg, president at Tower Bridge Advisors. “That would be good for the overall economy.
Natural gas inventories rose by 112 billion cubic feet, more than analysts expected. U.S. crude inventories fell for the fourth straight week.
On Friday, there will be the second estimate of first-quarter economic growth.
About three stocks declined for every two advancers on the New York Stock Exchange, with an exchange volume of 690.20 million and a composite volume of 2.934.30 billion.
Crude oil futures closed up 17 cents to $57.68 a barrel on the New York Mercantile Exchange. Gold futures settled up $2.50 to $1,188.10 an ounce.
The CBOE Volatility index, considered to be the best measurement of volatility, was at 13.
Costco reported quarterly earnings of $1.17 per share, two cents above estimates, though revenue and comparable store sales were below forecasts. The warehouse retailer was hurt by lower gasoline prices and a stronger dollar. Abercrombie lost 53 cents per share for its latest quarter, wider than the 34 cent consensus estimate. Revenue missed forecasts amid an eight percent drop in comparable store sales. The apparel retailer did say it sees sales improving, and that it will see continued headwinds from foreign currency fluctuations.
San Francisco Fed President John Williams said in Singapore on Thursday he expects the U.S. economy to grow about 2 percent and unemployment to drift below 5 percent this year, Reuters reported. Williams cautioned that more economic data needs to be collected before a decision on interest rates is made.
—CNBC’s Peter Schacknow and Reuters contributed to this report.
On tap this week:
8:30 a.m.: Real GDP Q1 (second)
9:45 a.m.: Chicago PMI
10 a.m.: Consumer sentiment