Stocks fall slightly as Treasury yields push higher

Stocks fell on Thursday morning as investors reacted to a rise in Treasury yields and monitored the health of the economy.

The Dow Jones Industrial Average lost 124 points, or 0.4%. The S&P 500 fell 0.5%, and the Nasdaq Composite shed 0.7%.

Casino stocks were some of the worst performers in the S&P 500, with Las Vegas Sands falling 3.4% and Caesars Entertainment falling 2.3%. Chinese tech stocks reversed recent gains, with Pinduoduo falling more than 6%.

Shares of Five Below dropped more than 5% after first-quarter sales came in softer than anticipated and the retailer shared weak guidance for the current period.

Tesla rose more than 2% after UBS upgraded the stock to buy. The firm also said the electric vehicle maker can rally more than 50% from current levels.

Futures were higher earlier in the morning, but lost ground as Treasury yields pushed higher following an update from the European Central Bank.

The European Central Bank confirmed its plan to hike interest rates in July and possibly again in September. The ECB also raised its inflation projection for 2022 to 6.8%, up from 5.1% previously, and lowered its growth outlook. Yields moved higher in Europe and in the U.S., where the benchmark 10-year Treasury yield jumped above 3.05%.

"The ECB has never provided clearer forward guidance than they did today, signalling that a 0.50% policy rate increase is likely unless inflation pressures subside. With energy prices, if anything, on an upward path and supply chain concerns unlikely to ease in the near future, inflation pressures will not be quickly eroded," said Seema Shah, chief strategist at Principal Global Investors.

Investors have been assessing the health of the U.S. economy, with a key inflation report due out on Friday.

Fundstrat's Tom Lee told CNBC's "Closing Bell: Overtime" on Wednesday that the likelihood of a soft landing from the Federal Reserve is growing and stocks have priced in "almost a full-blown recession."

"I think there's a series of hikes coming, but it's really the Fed being more hawkish than expectations that alarms markets," he said.

Oil prices dipped slightly on Thursday, but U.S. West Texas Intermediate crude still held above $120 per barrel.

Initial jobless claims rose to 229,000 last week, worse than the 210,000 expected.

Shares of Target were little changed after the company announced a dividend hike. The payout raise comes after a disappointing first quarter and a profit warning for the second quarter from the retail giant.

On Wednesday, the Dow dipped 269.24 points, or 0.81%, to 32,910.90, while the S&P 500 shed 1.08% to close at 4,115.77. The Nasdaq Composite slid 0.73% to finish at 12,086.27.