Stocks Close Lower, Dow Snaps Nine-Day Winning Streak - U.S. Commentary

(RTTNews) - After showing a lack of direction early in the session, stocks moved to the downside over the course of the trading day on Thursday. With the pullback on the day, the Dow closed lower for the first time in ten sessions.

The major averages climbed well off their worst levels going into the close but remained in the red. The Dow fell 77.80 points or 0.4 percent to 18,517.23, the Nasdaq dipped 16.03 points or 0.3 percent to 5,073.90 and the S&P 500 slid 7.85 points or 0.4 percent to 2,165.17.

The weakness that emerged on Wall Street was partly due to profit taking following the upward trend seen over the past few weeks.

The gains posted in the previous session lifted the Dow and the S&P 500 to new record highs, while the tech-heavy Nasdaq showed an even stronger upward move to reach its best levels of 2016.

A notable pullback by shares of Intel (INTC) also weighed on the markets, with the semiconductor giant slumping by 4 percent after ending Wednesday's trading at its best closing level in over a year.

The drop by Intel came after the company reported better than expected second quarter earnings but on revenues that were just shy of estimates. The company also reported a slowdown in revenue growth at its highly profitable Data Center Group.

Traders were also reacting to the European Central Bank's first monetary policy decision since Britain's vote to leave the European Union.

The ECB left interest rates unchanged, as was widely expected, and said it expects rates to remain at present or lower levels for an extended period of time.

In his subsequent press conference, ECB president Mario Draghi said the central bank will monitor economic and financial market developments very closely due to uncertainties raised by the so-called Brexit.

"Over the coming months, when we have more information, including new staff projections, we will be in a better position to reassess the underlying macroeconomic conditions, the most likely paths of inflation and growth, and the distribution of risks around those paths," Draghi said.

He added, "If warranted to achieve its objective, the Governing Council will act by using all the instruments available within its mandate."

Additionally, traders were presented with a mixed batch of U.S. economic data, including upbeat jobless claims and existing home sales reports but a disappointing reading on Philadelphia-area manufacturing.

Sector News

Railroad stocks showed a significant move to the downside on the day, dragging the Dow Jones Railroads Index down by 2.1 percent. With the loss, the index pulled back further off the nine-month closing high it set last Thursday.

Union Pacific (UNP) led the railroad sector lower, slumping by 3.4 percent after reporting lower second quarter earnings on weaker than expected revenues.

Significant weakness also emerged among oil service stocks, as reflected by the 2.2 percent loss posted by the Philadelphia Oil Service Index. The weakness in the sector came as crude oil for September delivery fell by $1 to $44.75 a barrel.

Airline stocks also came under pressure on the day, resulting in a 2 percent drop by the NYSE Arca Airline Index. Southwest Airlines (LUV) posted a steep loss after reporting weaker than expected second quarter results.

On the other hand, telecom stocks saw continued strength, with the NYSE Arca Telecom Index jumping by 3.4 percent. Qualcomm (QCOM) surged higher after reporting third quarter results that exceeded analyst estimates.

Gold stocks also held on to strong gains, as gold for August delivery climbed $11.70 to $1,331 an ounce. Reflecting the strength in the sector, the NYSE Arca Gold Bugs Index spiked up by 3.6 percent.

Other Markets

In overseas trading, most major stock markets across the Asia-Pacific region moved higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 0.8 percent, while Hong Kong's Hang Seng Index climbed by 0.5 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index edged down by 0.1 percent and the U.K.'s FTSE 100 Index fell by 0.4 percent.

In the bond market, treasuries moved mostly higher over the course of the session after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.5 basis points to 1.565 percent.

Looking Ahead

Earnings news is likely to be in focus on Friday due to the lack of major U.S. economic data scheduled to be released on the day.

AT&T (T), Capital One (COF), Starbucks (SBUX), and Visa (V) are among the companies releasing their quarterly results after the close of today's trading.

Additionally, American Airlines (AAL), General Electric (GE), Honeywell (HON), and Whirlpool (WHR) are due to report their results before the start of trading on Friday.