(Bloomberg) — US stocks continued to decline as investors contended with data validating the Federal Reserve’s assertion that the economy is robust enough to withstand more tightening.

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The S&P 500’s losses exceeded 1.5% and the Nasdaq 100 fell as much as 2.6%. A gloomy outlook from chipmaker Micron Technology Inc. knocked its shares and weighed on both indexes. The company’s warning counteracted some of the optimism fueled on Wednesday by data showing US consumer confidence at an eight-month high and a further decline in inflation expectations.

CarMax Inc. also fell after reporting earnings that fell short of already depressed expectations, deepening concerns over the weakening US used-car market. The policy-sensitive, two-year Treasury yield climbed to around 4.25%. The dollar was little changed after rising earlier.

Fresh US data on Thursday pointed to a resilient economy, driving concern that the Fed has a longer way to redress price growth. Initial jobless claims rose less than forecast in the week ended Dec. 17, underscoring the strength in the labor market. Third-quarter gross domestic product was revised to 3.2% — compared with a previously reported 2.9% advance — on firmer spending.

“It’s a bit interesting to see markets move on a third release of GDP. We’ve gotten this data a couple of times already, they were pretty big revisions,” Veronica Clark, Citigroup Inc. economist, said on Bloomberg Television. “Markets are hoping to see softer inflation now and we’re not getting it.”

Bearish comments from investor David Tepper, who told CNBC he’s “leaning short” on equities next year because of global tightening, added to the risk-off sentiment on Thursday.

The S&P 500’s large decline this month contrasts with an average 1.5% December gain since 1950, providing sidelined global investors with plenty of “dry powder” to put to work, according to analysts at SEB.

Meanwhile concerns are growing that Japanese investors could be persuaded to bring home some of the trillions of dollars they have stashed in foreign stocks and bonds as the yen and local bond yields rise in the wake of this week’s hawkish pivot from the Bank of Japan.

That could further lift global borrowing costs and drag on already cooling economic growth, with euro zone bonds seen especially vulnerable.

Oil prices are poised to end an extraordinarily volatile year modestly higher. West Texas Intermediate crude futures held above $78 a barrel, extending their gain into a fourth day, benefiting from a decline in US inventories and an uptick in consumer confidence.

Key events this week:

  • US consumer income, new home sales, US durable goods, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:


  • The S&P 500 fell 1.6% as of 10:17 a.m. New York time

  • The Nasdaq 100 fell 2.5%

  • The Dow Jones Industrial Average fell 1.3%

  • The Stoxx Europe 600 fell 1%

  • The MSCI World index rose 1.2%


  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0603

  • The British pound fell 0.5% to $1.2026

  • The Japanese yen rose 0.1% to 132.30 per dollar


  • Bitcoin fell 0.6% to $16,690.65

  • Ether fell 1.8% to $1,189.74


  • The yield on 10-year Treasuries was little changed at 3.66%

  • Germany’s 10-year yield advanced five basis points to 2.37%

  • Britain’s 10-year yield advanced four basis points to 3.61%


  • West Texas Intermediate crude rose 0.2% to $78.42 a barrel

  • Gold futures fell 0.9% to $1,808.20 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Cecile Gutscher, Rheaa Rao and Peyton Forte.

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