Stocks Close Modestly Lower But Off Worst Levels - U.S. Commentary

(RTTNews) - After ending the previous session nearly flat, stocks moved modestly lower over the course of the trading day on Thursday. Selling pressure remained relatively subdued, however, limiting the downside for the broader markets.

The major averages ended the day in negative territory but off their lows for the session. The Dow dipped 46.23 points or 0.3 percent to 18,479.91, the Nasdaq fell 24.44 points or 0.5 percent to 5,259.48 and the S&P 500 edge down 4.86 points or 0.2 percent to 2,181.30.

The tech-heavy Nasdaq closed lower for the first time in five sessions after reaching a record closing high on Wednesday.

The modest weakness on Wall Street came following the European Central Bank's announcement of its decision to leave interest rates unchanged.

The decision to leave rates unchanged was widely expected, although some analysts had been expecting the ECB to announce an extension of its quantitative easing program.

The ECB reiterated that its monthly asset purchases of 80 billion euros are intended to run until the end of March 2017, or beyond, if necessary.

In his subsequent press conference, ECB President Mario Draghi said the program will continue until the path of inflation is consistent with the bank's goal but said no extension was discussed at the meeting.

Carsten Brzeski, Chief Economist at ING-DiBa, said the ECB seems to be in no hurry to go wild and decide on new bold measures.

"Persistently stubborn low core inflation rates and the fact that significant fiscal stimulus will probably only come after the Dutch, French and German elections, suggests that the ECB will eventually be forced to extend QE, at least until the end of 2017," Brzeski said. "The next ECB meetings should be more exciting than today's."

On the U.S. economic front, the Labor Department released a report before the start of trading showing that initial jobless claims unexpectedly edged lower in the week ended September 3rd.

The report said initial jobless claims dipped to 259,000, a decrease of 4,000 from the previous week's unrevised level of 263,000. Economists had expected jobless claims to inch up to 264,000.

Sector News

Extending the pullback seen in the previous session, gold stocks showed a significant move to the downside on the day. Reflecting the weakness in the sector, the NYSE Arca Gold Bugs Index slumped by 2.2 percent.

The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery sliding $7.60 to $1,341.60 an ounce.

Computer hardware stocks also gave back ground following recent strength, dragging the NYSE Arca Computer Hardware Index down by 1.4 percent. The index ended Wednesday's trading at its best closing level in over a year.

Shares of Apple (AAPL) showed a notable decline after yesterday's unveiling of the tech giant's next generation iPhones.

On the other hand, energy stocks moved sharply higher on the day amid jump by the price of crude oil. Crude for October delivery spiked $2.12 to $47.622 a barrel after a report showed a steep weekly drop in oil inventories.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index soared by 3 percent, the Philadelphia Oil Service Index shot up by 2.5 percent and the NYSE Arca Oil & Gas Index advanced by 1.6 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index fell by 0.3 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

The major European markets also finished the day mixed. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index dipped by 0.3 percent and the German DAX Index dropped by 0.7 percent.

In the bond market, treasuries showed a notable move to the downside after ending the previous session nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped by 7.5 basis points to 1.616 percent.

Looking Ahead

Amid a lack of major U.S. economic data on Friday, traders are likely to keep an eye on remarks by Federal Reserve officials for any clues about the outlook for interest rates.