U.S. stocks ended the day mixed while a Treasuries rally eased in afternoon trading after data signaled a slowdown in the jobs market amid renewed concerns about the health of regional lenders.

The S&P 500 slid 0.2 per cent on Thursday after jobs and inflation data while the Nasdaq 100 gained 0.3 per cent. Alphabet Inc. buoyed the tech-heavy benchmark after the Google parent company showcased its artificial intelligence tools. Walt Disney Co. shares dropped on streaming service subscriber losses while Peloton Interactive Inc.’s stock slid after a recall of 2.2 million exercise bikes.

Data showed U.S. initial jobless claims reached the highest since October 2021 while producer prices rose 0.2 per cent in April, trailing economists’ estimates for a 0.3 per cent increase. The reports signal the Federal Reserve’s policy-tightening campaign may finally be having an effect on inflation as the central bank walks a tightrope between reining in rising prices and tipping the economy into a downturn.

“Inflation has peaked and is trending lower as growth weakens,” according to Don Rissmiller, chief economist at Strategas. The data support a Fed pause, he said, though there are other risks.

“While the U.S. does not appear to be in recession right now, there are some signs of cracks starting to appear, and global pressures remain,” he wrote.

Haven assets traded stronger, with the dollar rising and Treasury yields falling. The policy-sensitive two-year rate fell to 3.9 per cent, while 30-year bonds extended a rally following a stronger-than-expected auction.

Swaps traders are pricing in more than 75 basis points of cuts in 2023 after this week’s economic reports, which included a slightly better-than-expected consumer price readout on Wednesday.

“Today’s data is a step in the right direction from the Fed’s perspective,” Kara Murphy, chief investment officer of Kestra Investment Management, said in an interview. “But these numbers are really volatile week-to-week and we’re coming off of extraordinarily strong levels. There’s a lot more that has to happen.”

Economic indicators are “moving in the right direction, but none of it is enough to say that the Fed’s job is done,” she added.

Sentiment seemed fragile with investors still worried about the U.S. debt-ceiling and stability of the banking industry. In the options market, hedges against volatility are seeing the most demand in five years.

PacWest Bancorp dropped 23 per cent and was the worst performing regional lender after deposits fell 9.5 per cent last week. “The news headlines increased our customers’ fears of the safety of their deposits,” the company said in a regulatory filing Thursday.

Big banks were also weak after the Federal Deposit Insurance Corp. said larger lenders will face billions of extra fees to replenish the agency’s insurance fund.

Jamie Dimon said “we need to finish the bank crisis,” in a Bloomberg Television interview adding regulators should do “whatever they need to do to make it better.” JPMorgan’s chief executive officer predicted more regulations were ahead for lenders.

Elsewhere, industrial metals prices fell on the back of economic data pointing to economic weakness in China. Copper plumbed its lowest since January.

The Bank of England raised its benchmark lending rate to the highest level since 2008 and said further increases may be needed if inflationary pressures persist.

Key events this week:

• U.S. University of Michigan consumer sentiment, Friday
• U.S. Fed Governor Philip Jefferson and St. Louis Fed President James Bullard participate in panel discussion on monetary policy at Stanford University, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.2 per cent as of 4:01 p.m. New York time
• The Nasdaq 100 rose 0.3 per cent
• The Dow Jones Industrial Average fell 0.7 per cent
• The MSCI World index fell 0.3 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.5 per cent
• The euro fell 0.6 per cent to US$1.0917
• The British pound fell 0.9 per cent to $1.2513
• The Japanese yen fell 0.1 per cent to 134.54 per dollar

Cryptocurrencies

• Bitcoin fell 3.7 per cent to $26,842.63
• Ether fell 4 per cent to $1,784.93

Bonds

• The yield on 10-year Treasuries declined six basis points to 3.38 per cent
• Germany’s 10-year yield declined six basis points to 2.22 per cent
• Britain’s 10-year yield declined nine basis points to 3.71 per cent

Commodities

• West Texas Intermediate crude fell 1.5 per cent to $71.47 a barrel
• Gold futures fell 0.8 per cent to $2,020.20 an ounce