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Stocks are flat as gains in tech offset worries about the economy

Stocks hovered around the flatline as broad gains for the major tech names served as a counterweight to disappointing unemployment data and a dour economic outlook from the Federal Reserve. 

The Dow Jones Industrial Average was down just 23 points, or 0.1%. The S&P 500 traded marginally lower. The Nasdaq Composite outperformed, rising 0.2%.

Facebook rose 0.7% and Amazon climbed 0.2%. Netflix advanced 1.6% and Apple gained 1%. Microsoft and Alphabet were both up about 0.5%. Intel shares gained 2.9% after the company announced an accelerated buyback plan, calling its stock cheap.

U.S. weekly jobless claims totaled 1.106 million last week, the Labor Department reported. Economists polled by Dow Jones estimate that 923,000 first-time applicants filed for unemployment benefits during the week ended Aug. 15. In the week prior, the tally had dropped below 1 million for the first time since mid-March.

The jump in unemployment claims came as lawmakers struggled to move forward on a new coronavirus stimulus bill. Recently, an additional unemployment benefit for those impacted by the pandemic expired. 

“We can’t even be sure this recovery is sustainable as the economy got a huge boost from consumers’ wallets lined with $500 billion of stimulus from Washington from those $1,200 and $600 checks,” said Chris Rupkey, chief financial economist at MUFG. “That money is gone and with it the prospects for a lasting economic recovery where everyone on Main Street benefits. At the moment only stock market investors are riding high as the Federal Reserve’s money printing benefits Wall Street more than Main Street.”

However, continuing claims, which refer to those receiving unemployment benefits for at least two straight weeks, continued to decline. They fell by 636,000 to 14.844 million in the week ending Aug. 8. 

Thursday’s data release comes a day after the Federal Reserve released its July meeting minutes which said, “the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term.” 

The Fed’s comment knocked the S&P 500 from a new intraday record set on Wednesday. The benchmark closed at a new record high on Tuesday, confirming the start of a new bull market. The Dow and Nasdaq also turned negative after the minutes were released.

Wall Street also kept an eye on Washington amid lingering U.S.-China tensions. China’s commerce ministry announced early on Thursday that Washington and Beijing will be back around the negotiating table in the coming days.

Nvidia shares pulled back by 1.9% even after reporting blowout results. A better-than-expected 50% jump in revenue last quarter still wasn’t enough to lift the stock, which has doubled this year. Investors are growing concerned about valuations for high flying tech shares.

—CNBC’s Yun Li contributed to this report.

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