Stocks sold off Thursday, with the Dow Jones Industrial Average tumbling nearly 500 points, as investors' fears over a recession surfaced.

The Dow dropped 494.82 points, or 1.21%, to end at 40,347.97. At its session lows, the 30-stock index lost 744.22 points, or about 1.8%. The S&P 500 shed 1.37% to end at 5,446.68, while the Nasdaq Composite slipped 2.3% to 17,194.15. The Russell 2000 index, the small-cap benchmark that has rallied lately, dropped 3%.

Some fresh data stoked fears over a possible recession and the notion that the Federal Reserve could be too late to start cutting interest rates. Initial jobless claims rose the most since August 2023. The ISM manufacturing index, a barometer of factory activity in the U.S., came in at 46.8%, worse than expected and a signal of economic contraction. After these releases, the 10-year Treasury yield dropped below 4% for the first time since February.

These weak data releases come a day after central bank policymakers chose to keep rates at the highest levels in two decades, when Fed Chair Jerome Powell gave investors some hope by signaling a September rate cut is on the table.

"The data we have got since the Fed meeting signals all of a sudden that people are now worrying that maybe it isn't a soft landing and the Fed has vacillated too long," said Tom Fitzpatrick, managing director for global market insights at R.J. O'Brien and Associates. "The bond market is already telling you that we're behind the curve … the Fed is more prepared to make a different mistake for fear of making a similar mistake."

Chris Rupkey, chief economist at FWDBONDS, added that Thursday's data hinted at an economic downturn amid the volatility.

"The stock market doesn't know whether to laugh or cry because while three Fed rate cuts may be coming this year and 10-year bond yields are falling below 4.00%, the winds of recession are coming in hard," Rupkey said.

Stocks that would suffer the most under a recession were among notable losers during the day's trading session, including JPMorgan Chase, which lost 2.3%, and Boeing, which fell more than 6%.

Amid the selling, a handful of names managed to end the session on a positive note. Meta Platforms rallied 4.8% on stronger-than-expected second-quarter results and upbeat guidance.

Even Big Tech stocks such as Nvidia felt the pain with the artificial intelligence chip leader off 6.7% as investors took some chips off the table ahead of what could be a more volatile time for the market as the November election approaches. The S&P 500 is up 14% for the year still, coming off its eighth positive month in the last nine in July.

Stocks post steep losses Thursday

Stocks sank Thursday as recessionary fears resurfaced among investors.

The Dow Jones Industrial Average dropped 494.82 points, or 1.21%, to finish at 40,347.97. The S&P 500 lost 1.37% to end at 5,446.68, while the Nasdaq Composite shed 2.3% to close at 17,194.15.

— Pia Singh

UBS says a pullback is likely ahead

Investors should avoid being swept up in short-term volatility and stick to their long-term plans to avoid missing out on rebounds, according to UBS.

"Market sentiment and positioning had become extended — making a pullback more likely. But market fundamentals remain positive, and we continue to expect the S&P 500 to recover and end the year higher at 5,900 versus the current 5,522," Solita Marcelli, chief investment officer Americas, wrote in a note on Thursday.

Marcelli highlighted Wednesday's megacap tech stock rebound following a sharp fall in mid-July that led the S&P 500 to lose nearly 5% from its all-time high.

With this in mind, Marcelli advised investors to gain exposure to long-term growth opportunities in the artificial intelligence trend and to also position for lower rates by investing cash and money market holdings into high-grade government and corporate bonds.

— Hakyung Kim

Morgan Stanley ups Boeing price target, says 'challenges' remain despite new CEO appointment

Morgan Stanley sees more upside for Boeing stock moving forward following the appointment of CEO Kelly Ortberg earlier this week, but cautioned that "challenges" remain.

The firm reiterated an equal weight rating on the aerospace stock and increased its price target to $195 per share, implying more than 2% upside from Wednesday's $190.60 close.

"We continue to expect tactical volatility in Boeing's stock," analyst Kristine Liwag wrote Thursday. "Incrementally negative news flow on operations pressure stock performance and in periods where there are no new incremental negative news, investors typically focus on the Bull case."

— Brian Evans

Apple is pacing for a bearish 'outside day' ahead of earnings release

Apple is heading for a potentially bearish "outside day" if it closes Thursday below $220.63, the bottom of the stock's range from Wednesday.

The largest company in the S&P 500 reports earnings after the bell in a much-anticipated report where both iPhone and artificial intelligence commentary will be in focus. Analysts forecast earnings per share of $1.35 on revenue of $84.53 billion, according to LSEG. This would be up from $1.26 in earnings per share and $81.8 billion for the corresponding quarter in 2023.

Trading in options implies a move of about +/-4% on AAPL earnings.

AAPL is the best-performing stock in the so-called Magnificent Seven over the past three months, gaining 28% during that period.

An "outside day" is a two-day technical pattern where the second day's trading range fully engulfs the prior day's range and changes the direction of recent momentum. Traders often use this pattern to predict potential reversals in an asset's direction.

— Nick Wells

Volatility measure rises to highest level since February

The CBOE Volatility Index (VIX) jumped 3 points to 19.48 Thursday afternoon to its highest level year to date, before coming back slightly to 19.10.

The index last reached similar highs this year on April 19, when it touched 21.33.

The VIX indicates the implied volatility of the S&P 500 over the next 30 days, and is commonly known as the "fear gauge."

— Hakyung Kim

Eli Lilly, Proctor & Gamble remain bright spots on Thursday

Shares of Eli Lilly and Procter & Gamble were each more than 3% higher on Thursday, standing out as bright spots in an overall sluggish trading day.

Eli Lilly's advance follows news that its Zepbound drug showed a lower risk of heart failure in a late-stage study, the latest sign that some GLP-1 drugs have benefits outside of weight loss.

Procter & Gamble's climb comes even as the company missed fourth-quarter revenue estimates earlier in the week while earnings surpassed estimates.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Thursday's sell-off doesn't shake conviction from opportunity of AI, says Deepwater's Gene Munster

The stock sell-off on Thursday has done little to sway Deepwater Asset Management managing partner Gene Munster's conviction on the strength of artificial intelligence and the technology sector of the market.

"The market is hyper skittish and is trading less on fundamentals and more on emotion. … I think this is what happens when a lot of people make a lot of money in a short amount of time," Munster said.

"Big picture, nothing has changed in the opportunity of AI and my conviction that we're still in a three to five year bull market," he added.

— Brian Evans

VanEck Semiconductor Index heads for worst day since 2020

The VanEck Semiconductor ETF dropped 7.5% on Thursday and headed for its worst session in more than four years.

If shares close at these levels, the stock will notch its worst trading day since March 18, 2020, when shares sank more than 8%.

Lam Research was the biggest decliner in the index, slumping more than 11%. Qualcomm dropped 10.5%, while Advanced Micro Devices and Monolithic Power declined at least 9%. Nvidia and Micron Technology lost at least 8%.

— Samantha Subin

Utility stocks leap to two-year high as yields slide and investors seek safe havens

The S&P 500 Utilities Index on Thursday surged to its highest since the spring of 2022 — sending a host of power companies' stocks to 52-week highs — as fixed income yields tumbled and investors sought the safety of less-volatile stocks offering steady dividends and now, in some instances, growth tied to the artificial intelligence power boom.

Among a host of utility stocks scoring new 52-week highs on Thursday were Consolidated Edison, Southern Company, Sempra, DTE Energy, American Electric Power, Dominion Energy, NiSource, Edison International, FirstEnergy, CMS Energy, Pinnacle West Capital and Duke Energy.

Lower bond yields boost utilities' bottom lines because of the capital-intensive nature of their investment spending, and constant need to refinance and roll over existing debt. At the same time, utilities' often high dividends become more attractive as Treasury yields decline.

— Scott Schnipper

Nvidia drops nearly 8%, heads for second losing session in three

Nvidia shares dropped nearly 8%, putting the chipmaker on pace for its second losing session in three.

As of afternoon trading, the artificial intelligence darling is down 4.6% and headed for its third straight losing week.

Nvidia is headed for its worst session since April, when shares tanked 10%.

— Samantha Subin

Chip stocks broadly lower Thursday, headed toward losing week

Nvidia led the semiconductor industry's losses on Thursday.

The chipmaking giant declined nearly 5% Thursday. The VanEck Semiconductor ETF (SMH) fell 6.1%, with Broadcom, Micron Technology and ON Semiconductor all down 7% or more. Lam Research and Qualcomm tumbled 11% and 9.4%, respectively.

Nvidia is on pace to end the week 2.5% lower, while the VanEck Semiconductor ETF is negative by 3.5% week to date.

— Hakyung Kim

45 stocks in the S&P 500 trade at new 52-week highs

During Thursday's trading session, 45 stocks in the S&P 500 index reached new 52-week highs.

The names that hit this milestone included:

• eBay trading at levels not seen since April 2022
• Danaher trading at levels not seen since January 2022
• Vertex Pharmaceuticals trading at all-time highs back to its initial public offering in July 1991
• Motorola Solutions trading at all-time highs back to when it began trading as a separate entity post the Motorola Mobility split
• Targa Resources trading at levels not seen since October 2014
• Howmet Aerospace trading at all-time highs back to its Alcoa spinoff in November 2016
• Entergy trading at levels not seen since December 2022
• Thermo Fisher Scientific trading at levels not seen since January 2022
• Southern Company trading at all-time-high levels back through our history to 1972
• Allstate trading at all-time-high levels back to its IPO in 1993, originally the insurance subsidiary of Sears, Roebuck

On the other hand, just 12 stocks were trading at their 52-week lows: Dollar Tree, Las Vegas Sands, Ulta and Wynn.

— Lisa Kailai Han. Christopher Hayes

Small-cap ETF heads for worst day since February

Last month's big winner is taking a big hit to start August.

The iShares Russell 2000 ETF (IWM), which tracks the small-cap index, dropped 2.9% on Thursday. That put the fund on pace for its biggest one-day loss going back to Feb. 13, when it plunged 4.1%.

The exchange-traded fund is coming off its best monthly performance since December, surging 10.3% in July.

— Fred Imbert

Stocks making the biggest moves midday

Here are the stocks on the move midday:

• Shake Shack – The stock gained more than 15% after the burger chain's revenue topped estimates. Shake Shack earned 27 cents per share, excluding items, on revenue of $316 million, above the LSEG estimate of $314 million. Shake Shack also narrowed its full-year revenue estimate to between $1.22 billion and $1.25 billion from a prior range of $1.24 billion to $1.25 billion, per FactSet.
• C.H. Robinson – Shares popped around 14% after the logistics company posted stronger-than-expected second-quarter earnings of $1.15 per share, excluding items, compared to a consensus estimate of 96 cents, according to analysts surveyed by LSEG. Revenue of $4.48 billion, however, came in slightly below expectations of $4.53 billion.
• Mobileye Global – Shares fell around 21% after the company lowered its revenue and adjusted operating income forecast for the full year. That is despite posting better-than-expected earnings and revenue for the second quarter.

Read the full list here.

— Sean Conlon

Three quarters of NYSE total volume is lower Thursday; Nasdaq at 66%

Three-quarters of all the share volume traded on the New York Stock Exchange on Thursday were down in price while two-thirds of volume declined on the Nasdaq Stock Market, according to data from FactSet.

The number of declining stocks accounted for 64% of all those traded on the NYSE, roughly the same as the 63% of decliners on the Nasdaq.

Still, the number of 52-week highs on the NYSE reached 162 on Thursday versus 32 new lows, while over on Nasdaq, 99 stocks touched a new 52-week high against 86 new lows.

Trading was active, with late-morning NYSE composite volume totaling about 32% of the past 30 days' average versus 40% on the Nasdaq.

— Scott Schnipper

10-year yield slips below 4% on manufacturing weakness, rate cut hopes

The 10-year Treasury note yield dipped below the psychologically important 4% level Thursday as the manufacturing sector slipped deeper into contraction and expectations rose for the Federal Reserve to start lowering interest rates.

In morning trade, the yield on the benchmark debt instrument fell to 3.975%, off nearly 13 basis points, or 0.13 percentage points. The note has not traded below 4% since early February.

That came as the Institute for Supply Management reported that its index measuring factory activity in the U.S. for July slumped to 46.8%, down 1.7 percentage points from June and below the Dow Jones estimate for 48.9%.

As that report came in, traders upped their bets that the Fed will be cutting rates this year. They raised the odds for cuts at each of the three remaining Federal Open Market Committee meetings this year, and pushed up the likelihood of a full percentage point of reductions to about 20%, according to the CME Group's FedWatch measure of 30-day fed funds futures contract pricing.

— Jeff Cox

Moderna shares plunge after biotech giant cuts guidance

Shares of Moderna fell more than 16% after the company surpassed revenue expectations for the second quarter but slashed its full-year sales guidance.

The biotech cited lower expected sales in Europe, a competitive environment for respiratory vaccines in the U.S. and possible deferred international revenue into 2025. Moderna now expects its full-year product revenue to come in between $3 billion and $3.5 billion, lower than previous guidance of $4 billion. 

For more on Moderna's earnings, read here.

— Pia Singh, Annika Kim Constantino

Stocks open in the green on Thursday

The S&P 500 opened 0.4% higher shortly after 9:30 a.m. ET. The tech-heavy Nasdaq Composite gained 0.3%, while the Dow Jones Industrial Average opened roughly 144 points higher, or 0.35%.

— Pia Singh

Ferrari beats Wall Street's Q2 expectations, raises 2024 guidance

Shares of Ferrari increased as much as 5% during premarket trading after the automaker beat Wall Street's second-quarter expectations and raised its financial outlook for the year.

The luxury sports car manufacturer reported adjusted earnings per share of 2.29 euros for the second quarter and net revenue of 1.71 billion euros. That compared to Wall Street's expectations of 2.08 euros in adjusted earnings per share and revenue of 1.61 billion euros, according to an average of estimates compiled by LSEG.

Ferrari's shipments during the quarter were 3,484 units from April through June, up 2.7% versus the second quarter of 2023.

The company's new upward guidance for the year includes net revenue of more than 6.55 billion euros, up from 6.4 billion euros, and adjusted earnings before interest and taxes of 1.82 billion euros, or adjusted earnings per share of more than 7.90 euros, up from 1.77 billion euros, or adjusted earnings per share of 7.50 euros.

— Michael Wayland

Jobless claims surge but labor costs fall

Initial unemployment claims jumped last week while a measure of labor costs was unexpectedly low, according to economic data released Thursday.

First-time filings for unemployment insurance totaled 249,000 for the week ending July 27, an increase of 14,000, the Labor Department reported. That was the highest level since August 2023 and above the 235,000 Dow Jones estimate.

Continuing claims, which run a week behind, increased to 1.877 million, the highest level since Nov. 27, 2021.

In other news, unit labor costs, a measure of wages and productivity, rose just 0.9% in the second quarter, below the 1.7% forecast, the department's Bureau of Labor Statistics reported. Over the past four quarters, unit labor costs were up just 0.5%, the smallest increase since the third quarter of 2019.

— Jeff Cox

Stocks making the biggest moves premarket

Check out some of the companies making headlines in premarket trading:

• Hershey — Shares were down 7% in the premarket after the chocolate maker posted second-quarter results that missed analysts' expectations. The company earned $1.27 per share on revenue of $2.07 billion. Analysts polled by LSEG expected a profit of $1.43 per share on revenue of $2.31 billion. "Today's operating environment remains dynamic with consumers pulling back on discretionary spending," CEO Michele Buck said in a statement.
• Amazon — Stock in the e-commerce giant was roughly 2% higher ahead of second-quarter results after the closing bell on Thursday. Analysts polled by FactSet forecast earnings per share of $1.03 on $148.6 billion in revenue.
• Etsy — The e-commerce stock dipped more than 1% after posting mixed quarterly results. Etsy topped revenue expectations, but adjusted earnings came in at 41 cents per share, missing the consensus estimate of 45 cents per share, per LSEG.

Read the full list here.

— Brian Evans

Announced layoffs in July highest for the month since 2020

Last month saw the highest announced layoffs for any July going back to 2020, outplacement firm Challenger, Gray & Christmas reported Thursday.

Planned job cuts totaled 25,885 on the month, a 47% decrease from June but 9% higher than the same month a year ago.

Year to date, companies have announced 460,530 layoffs, down 4.4% from the same period in 2023 but the third highest since 2009, according to Challenger.

—Jeff Cox

Hershey shares fall after disappointing earnings report

Shares of Hershey were down 7% in the premarket after the chocolate maker posted second-quarter results that missed analysts' expectations.

The company earned $1.27 per share on revenue of $2.07 billion. Analysts polled by LSEG expected a profit of $1.43 per share on revenue of $2.31 billion.

"Today's operating environment remains dynamic with consumers pulling back on discretionary spending," CEO Michele Buck said in a statement.

— Fred Imbert

Bull market still has legs, BofA says

Despite the S&P 500 suffering its first 2% pullback in nearly a year last week, Bank of America is still optimistic about equities going forward. That was a "consolidation phase within the confines of the bull market perhaps, but not the end to it. On the contrary, things are just starting to fall in place for the broader corporate sector," according to strategists at BofA.

— Fred Imbert

Fed tees up a September rate cut, Ned Davis Research says

With Wednesday's announcement and news conference, the Federal Reserve has teed up a rate cut next month, according to Ned Davis Research's Joe Kalish.

"The Fed is preparing the markets for a September rate cut, which was evident in the changes made to the statement that was close to our expectations," wrote Kalish, the firm's chief global macro strategist.

"What it didn't say is that they have gained greater confidence that inflation is moving toward target. That will change when they actually cut rates," he added. Fed Chair Jerome Powell, however, "acknowledged that they have gained additional confidence and if the data stays like it has been coming in recently, a September cut is 'on the table.'"

— Fred Imbert

Semiconductor ETF notches best day in more than a year

The VanEck Semiconductor ETF rallied 7.6% on Wednesday to secure its best session since May 2023.

Those gains came after strong results lifted Advanced Micro Devices more than 4% and boosted the broader sector. Nvidia popped nearly 13% for its best day since February, while Broadcom surged 12%. Qualcomm, ASML Holding and KLA Corporation each gained more than 8%.

Marvell Technology jumped more than 6%, while Micron Technology and Taiwan Semiconductor Manufacturing rose about 7% each. Skyworks Solutions was the only loser in the index, falling 3.5%.

— Samantha Subin

Gundlach says to expect 150 basis points of rate cuts over the next year

DoubleLine founder Jeffrey Gundlach said market participants should expect 150 basis points in interest rate cuts from the Federal Reserve over the next year.

For reference, decreases that total the amount he is suggesting would result in the key interest rate sitting at between 3.75% and 4%. Following Wednesday's announcement that the borrowing cost would remain unchanged, it is currently at 5.25% to 5.5%.

"I think we're going to see about 150 basis points of cuts," Gundlach said on CNBC. "That's my base case for over the next year at the most."

— Alex Harring, Scott Schnipper

Gold futures reached a record closing high Wednesday, extending 2024 gain beyond 19%

Gold futures added 0.9% on Wednesday (DEC), closing at a new record of $2,473 an ounce, after Fed Chair Jerome Powell said the central bank may start lowering interest rates in September if inflation data continues to cool.

Gold ended July higher by 5.7%, the precious metal's fourth advance in five months and extending this year's advance to 19.4% On an inflation-adjusted basis, gold's all-time high remains $3,461an ounce, dating from January 1980, the final year of then-President Jimmy Carter's term in office.

— Gina Francolla, Scott Schnipper

Meta Platforms, Arm Holdings among Wednesday's biggest movers after the bell

These are the stocks making the biggest moves in extended trading:

• Meta Platforms — Shares of the social media giant rallied 7%. Meta Platforms topped revenue and earnings expectations for the recent quarter, posting earnings of $5.16 per share on $39.07 billion in revenue.
• Arm Holdings — The U.K.-based semiconductor stock shed about 13% on light guidance. Arm forecast adjusted earnings ranging from 23 cents to 27 cents per share for the fiscal second quarter, while analysts called for 27 cents, per LSEG.
• Teladoc — The telehealth stock slid more than 15% after posting worse-than-expected revenue in the second quarter.

Read the full list of stocks on the move after the bell here.

— Samantha Subin

Stock futures open higher

Stock futures opened higher Wednesday evening as Wall Street assessed the latest batch of earnings reports.

The S&P 500 futures jumped 0.3%, boosted by strong results from Meta Platforms. Nasdaq-100 futures rose 0.5%, while futures tied to the Dow Jones Industrial Average added 40 points, or 0.1%.

— Samantha Subin