Stock market today: Indexes tank as data paints a negative picture for the economy

Stock indexes tanked Thursday as new data shows jobless claims are on the rise while manufacturing and construction both slowed.

• US stocks nosedived on Thursday after several discouraging economic data points.
• Jobless claims soared past estimates to the highest level seen in nearly a year.
• The ISM manufacturing index dropped from 48.5% in June to 46.8% in July, marking an eight-month low.

US stock indexes saw a deep sell-off on Thursday as a combination of rising unemployment and slowing economic indicators weighed on markets.

In the labor market, new data showed jobless claims came in at 249,000 for last week, above estimates of 236,000. That number marks the highest level in nearly a year and is another signal to the Fed that rate cuts are needed soon.

Investors are pricing in a 100% chance of Fed rate cuts in September, according to the CME FedWatch tool. During an FOMC meeting on Wednesday, Fed Chair Jerome Powell suggested the Fed would be "data dependent, but not data-point dependent" in making the decision to cut rates.

Meanwhile, new data shows ISM manufacturing slid further into contraction territory in July. The ISM manufacturing index dropped from 48.5% in June to 46.8% in July—an eight-month low—showing that U.S. factories are still in a downturn.

Further data shows construction spending unexpectedly declined in June, falling 0.3% to $2.15 trillion. Economists had predicted a 0.2% rise, according to a poll by Reuters.

The fall comes as single-family home construction slowed due to higher mortgage rates.

The market reaction shows investor optimism over the prospect of a September rate cut — and potentially more aggressive cuts than are currently being expected — is being outweighed by negative economic developments.

Here's where US indexes stood at the 4 p.m. closing bell on Wednesday:

• S&P 500: 5,446.68, down 1.4%
• Dow Jones Industrial Average: 40,347.97, down 1.2% (495 points)
• Nasdaq composite: 17,194.14, down 2.3%

Here's what else happened today:

• Moderna's stock tumbled as much as 21% after posting a disappointing sales slump as demand for its Covid-19 vaccine slows.
• Jensen Huang just got $12 billion richer in a single day as Nvidia's stock soared on Wednesday.

In commodities, bonds, and crypto:

• Brent crude, the international benchmark, fell 0.8% to $80.05 a barrel.
• Gold rose 0.6% to $2,441.80 per ounce.
• Bitcoin slipped 1.9% to $63,324.32.