12:50 PM EDT, 08/01/2024 (MT Newswires) -- US equity indexes slumped with government bond yields as jobless claims hit the highest in a year while a manufacturing gauge surprisingly sank deeper into contractionary territory.

The Nasdaq dropped 1.7% to 17,301.5, with the S&P 500 down 1.1% to 5,461.4 and the Dow Jones Industrial Average 1.2% lower at 40,335.8 after midday on Thursday. Futures of all three indexes were higher in premarket, with the Nasdaq leading the pack.

According to a note from D.A. Davidson, S&P 500 and the Nasdaq gains were capped because of a pullback in "some mega-cap and chip stocks." Traders will keep a close eye on Apple ( AAPL ) , Amazon.com ( AMZN ) , and Intel's ( INTC ) quarterly results post-bell.

Energy, industrials, technology, and consumer discretionary were among the steepest decliners intraday. The communication services sector, home to the social media giant Meta, led the gainers after midday.

In economic news Thursday, the Institute for Supply Management's US manufacturing index declined to 46.8 in July from 48.5 in June, compared with expectations for 48.8 in a survey compiled by Bloomberg.

US initial jobless claims rose to 249,000 in the week ended July 27 from 235,000 in the previous week, compared with expectations for 236,000 in a survey of analysts compiled by Bloomberg. According to a D.A. Davidson note, the latest weekly print is the highest over a year. The four-week moving average rose by 2,500 to 238,000.

Treasury yields plummeted intraday, with the 10-year sinking 12.5 basis points to 3.98% and the two-year rate diving 15.3 basis points to 4.18%.

On Wednesday, Fed Chair Jerome Powell signaled that a September rate cut is a reasonable base case without pre-committing to that outcome, a note from Deutsche Bank said. He noted that officials started to discuss rate cuts at the July 31 meeting and indicated that a continuation of recent data trends would be consistent with a reduction being "on the table at the September meeting."

Meta Platform's (META) shares were 5.5% higher intraday, the leader on the Nasdaq, after gaining more than 9% earlier in the session, as the Facebook owner reported a bigger-than-expected increase in Q2 earnings and sales.

West Texas Intermediate crude oil dropped 1.2% to $77.01 a barrel.