Stocks Drop After Strong Reports on the Economy

Wall Street stumbled to its longest losing streak in more than a month Thursday as US stocks gave back more of this year's big gains for a third straight day.

• The S&P 500 fell 33.25 points, or 0.5%, to 6,604.72.
• The Dow Jones Industrial Average fell 173.96 points, or 0.4%, to 45,947.32.
• The Nasdaq composite fell 113.16 points, or 0.5%, to 22,384.70.

All three indexes are still near their records set at the start of the week, the AP reports. Stocks felt pressure from reports showing the US economy may be stronger than economists thought. That could make the Federal Reserve less likely to cut interest rates several times in the coming months. If the Fed doesn't cut rates as many times as investors expect, it would empower criticism that's already built saying the stock market is too expensive after rising so much, so quickly.

"Buckle up," warned Jonathan Krinsky, chief market technician at BTIG. Stocks look to be in their most vulnerable position since their April lows given how much complacency has built up and how the rubber band recently has been "as stretched as it gets in some parts of the market," Krinsky wrote in a research report.

• One of Thursday's better-than-expected economic reports said that fewer US workers filed for unemployment benefits last week. That could be a signal that the pace of layoffs is slowing.
• Another report said the US economy grew at a stronger pace during the spring than earlier thought. The Commerce Department said consumer spending helped the economy expand at a surprising 3.8% from April through June, up from a previous estimate of 3.3%, the AP reports.
• A third said orders blew past economists' expectations last month for US manufactured goods with a relatively long life span.

On Wall Street, CarMax tumbled 20.1% after the seller of used autos reported a weaker profit for the latest quarter than analysts expected. It sold fewer vehicles during the quarter than it had a year earlier. It also was hurt because it increased its expectations for losses from loans made in earlier years. Jabil fell 6.7% even though it reported a stronger profit for the latest quarter than analysts expected, thanks in part to demand coming because of artificial intelligence. Another AI winner, Oracle, gave back 5.6%. Earlier this month, it surged to its best day since 1992 after announcing several huge contracts signed because of AI. Starbucks slipped 0.5% after the coffee chain announced a $1 billion plan to restructure, including the closure of stores and the cutting of 900 nonretail jobs.

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On the winning side of Wall Street was IBM. It rose 5.2% after HSBC announced a promising trial with IBM of quantum computing in hopes of improving bond trading. The bank said it delivered an improvement of up to 34% in predicting how likely a trade would be filled at a quoted price. Companies are racing to develop quantum computing in order to solve complex problems beyond the reach of classical computers.