What’s driving the market?

Technology stocks weighed on the benchmark stock indexes, with the S&P 500 tech sector down 1.2%. Technology stocks have been the been the best-performing sector this year on prospects for growth during the coronavirus pandemic, but Amazon.com Inc. US:AMZN is now on pace to snap its record 10-week winning streak, while Microsoft Corp. US:MSFT is on pace for its worst week since March.

The U.S. corporate earnings reporting season has so far largely cheered investors with results from big banks. Morgan Stanley US:MS on Thursday reported second-quarter profit that beat analyst expectations, led by strength in investment banking and trading, but Bank of America Corp. US:BAC shares fell after the bank said it would boost its loan-loss provisions.

“Despite today’s weakness, the market is doing quite well,” said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research. Frederick noted that the S&P 500 had briefly erased its losses for the year to date. With the bar set so low for second-quarter earnings, it’s possible more positive surprises could even result in a boost for stocks, he said.

U.S. economic data was also mixed on Thursday. First-time jobless claims for the week ending July 11 were only lower by 10,000 compared with the prior week: at 1.3 million, a much more muted recovery than the consensus of 1.24 million from economists surveyed by MarketWatch.

A separate report showed that retail sales roared back in June, rising 7.5%, compared with the 5.4% increase that had been forecast. And the July Philadelphia Fed index also beat expectations: falling only to 24.1 from 27.5, better than the 20 level expected. But the jobless claims data are more recent, and may signal cracks in the nascent economic recovery as states move to reimpose shutdown measures.

Meanwhile, a measure of home-builder confidence surged 14 points to 72 in July, regaining pre-pandemic levels, and business inventories slipped 2.3% in May, in line with economists’ expectations.

Global equities were under pressure after Chinese stocks suffered their biggest one-day loss since the start of the coronavirus pandemic overnight. Analysts said softer-than-expected consumer economic data from Beijing was weighing on stocks and other risky assets, as was a continued rise in tensions between Beijing and Washington may have shaken investor sentiment.

The Trump administration is weighing a ban that would prevent members of the Chinese Communist Party and their families from traveling to the U.S., while the Trump administration said Wednesday that it would ban travel for employees of Chinese technology group Huawei and other companies it deems complicit in helping Beijing crack down on human rights in the country. China recently imposed travel restrictions on some U.S. officials, including Sens. Marco Rubio and Ted Cruz.

The U.S.-China tensions overshadowed upbeat economic data that saw China’s second-quarter gross domestic product expand 3.2% from a year ago, beating an analyst consensus estimate of 2%, and marking a bounce after a 6.8% rout in the first quarter. Analysts said other data from China, including an unexpected fall in retail sales, were also concerning.

“China was the first nation to suffer from COVID-19 and go into lockdown. They are ahead of the West on the recovery curve. However, the cautious consumer could well be a signal of what we can expect across the U.K. or the U.S.,” said Fiona Cincotta, market analyst at CityIndex, in a note.

However, “the virus is the greatest part of the story,” said Schwab’s Frederick. Flare-ups in U.S. case counts, news about hospitals being overwhelmed, “all of those things shock people a lot. It causes people to go back into their homes, be more hesitant,” he said in an interview.

Read:Here’s the good news and bad news about China GDP data

As widely expected, the European Central Bank made no changes to its asset-buying program or to interest rates at a meeting Thursday.

Which companies are in focus?

• Twitter Inc. US:TWTR shares fell 1.1%. Accounts belonging to top U.S. executives, lawmakers and celebrities were compromised Wednesday afternoon in what appeared to be an attempt to siphon bitcoin from social-media followers. Twitter said it believed the incident was “a coordinated social engineering attack by people who successfully targeted some of our employees with access to internal systems and tools.”
• Charles Schwab Corp. US:SCHW on Thursday reported profits that beat expectations but revenue that missed. Shares fell 2.1%.
• Bank of America Corp. shares declined 2.7% after the bank delivered results that topped Wall Street expectations.
• Shares of Morgan Stanley rose 2.5% after its results.
• Domino’s Pizza Inc. US:DPZ shares fell 1.5% even after the pizza chain reported quarterly results that trounced analyst expectations. U.S. same-store sales grew 16.1%, management said.
• Johnson & Johnson US:JNJ Shares of rose 0.7% after the drug and consumer health products company reported second-quarter profit and sales that beat expectations, and raised its full-year outlook. The company expects the Phase 1 trial for its COVID-19 vaccine candidate to begin next week, its CFO told CNBC.
• Abbot Laboratories US:ABT shares edged 0.3% lower even after the company reported revenue and profit that beat analyst expectations, and offered rosy guidance for the coming year.

What are other markets doing?

The Shanghai Composite Index CN:SHCOMP fell 4.5% for its biggest one-day loss since Feb. 3, according to Dow Jones Market Data, while the CSI 300 Index XX:000300 dropped 4.8%. Japan’s Nikkei 225 Index JP:NIK fell 0.8%, while the Hang Seng Index HK:HSI in Hong Kong lost 2%.

The pan-European Stoxx 600 Europe Index XX:SXXP declined 0.5%, while London’s FTSE 100 Index UK:UKX fell 0.7%.

The yield on the 10-year Treasury note BX:TMUBMUSD10Y was off about 1.2 basis points at 0.618% as investors pivoted away from riskier assets. Bond yields and prices move in opposite directions.

The ICE U.S. Dollar Index US:DXY, a measure of the U.S. currency against a basket of six major rivals, rose 0.3%.

Oil futures US:CL were under pressure, ending lower as investors reconsidered the durability of the budding economic expansion. Meanwhile, gold US:GC00 also pulled back.

Related:China’s stock market just jumped 6%. This is a good thing and Westerners should be glad. No, really.