Stocks lower after Kabul bombing; traders also wait for Fed

In this June 16, 2021 file photo, the facade of the New York Stock Exchange. Stocks are slightly lower on Wall Street Thursday, Aug. 26, 2021 as the market's momentum cools off following a five-day winning streak for the S&P 500. The benchmark index was down less than 0.1% in the early going. It has set more than 50 record highs this year, the latest one on Wednesday. (AP Photo/Richard Drew, File)

Stocks were broadly lower in afternoon trading Thursday following suicide attacks at the Kabul airport in Afghanistan that killed at least 12 U.S. service members and wounded several others.

The S&P 500 index was down 0.5% as of 3:31 p.m. Eastern. The benchmark index was coming off a five-day winning streak and an all-time high. The Dow Jones Industrial Average fell 0.5% and the Nasdaq composite fell 0.5%. The three major indexes remain on track for a weekly gain.

Twin suicide bombings struck Thursday outside Kabul’s airport, where large crowds of people trying to flee Afghanistan have massed. Eleven U.S. Marines and one Navy medic were killed, according to two U.S. officials. A number of U.S. military troops were wounded. The airport had been the focus of NATO evacuations from the country after the Taliban took over last week.

On Wall Street, the selling was widespread, with 10 of the 11 sectors in the S&P 500 moving lower. Technology stocks and a mix of companies that rely on consumer spending accounted for much of the pullback. Western Digital fell 4.6% and Dollar Tree dropped 11.4%. Banks and communication stocks also weighed on the market. Citigroup fell 1% and ViacomCBS dropped 2.2%.

Small company stocks bore some of the heaviest selling. The Russell 2000 index was down 1.1%.

The market slide was due to “traders looking to take some profits from frequent advances, pointing to the attack in Afghanistan as a reason for doing so,” said Sam Stovall, chief investment strategist at CFRA.

Despite the pullback in stocks, market indicators that traditionally signal worry on Wall Street were little changed. Treasury yields were mixed, and the yield on the closely watched 10-year Treasury held steady at 1.35%. Meanwhile, the price of gold rose only 0.2%.

The VIX, a measure of nervousness among stock investors, rose 13.1%, but remained slightly below 20, which signals market risk is low.

Before the attack, most of the market's attention was on the Federal Reserve. The Fed's annual two-day convention started in Jackson Hole, Wyoming, on Thursday. Fed Chair Jerome Powell is scheduled to speak on Friday.

Traders are betting that Fed officials will remain in a “wait and see” mode regarding inflation, since most policymakers believe any inflation earlier this year would be temporary and the rise in COVID-19 cases has worried some economists.

That said, yields have steadily risen in the bond market in the past week, which could be a sign that traders are preparing for the Fed to start winding down its emergency support measures in the coming months.

Jobless claims edged up by just 4,000 to 353,000 from a pandemic low 349,000 a week earlier, the Labor Department reported Thursday. The four-week average fell by 11,500 to 366,500. That's the lowest since mid-March 2020.

Salesforce.com was one of the biggest gainers, rising 3.7% after the company’s quarterly results easily beat analysts’ expectations. The company also raised its full-year outlook.

Companies that report their results after Thursday's closing bell include technology giant HP, as well as Gap.