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

(RTTNews) - After showing a notable move to the downside early in the session, stocks staged a significant recovery attempt over the course of the trading day on Thursday. The major averages climbed well off their worst levels of the day but remained stuck in negative territory.

The major averages finished the day modestly below the unchanged line. The Dow edged down 23.69 points or 0.1 percent to 20,919.42, the Nasdaq dipped 13.18 points or 0.2 percent to 6,115.96 and the S&P 500 slipped 5.19 points or 0.2 percent to 2,394.44.

The early weakness on Wall Street reflected a negative reaction to the latest batch of earnings news, with Macy's (M) posting a steep loss after reporting weaker than expected first quarter results.

Snapchat parent Snap (SNAP) also fell sharply after reporting a wider than expected first quarter loss on revenues that came in below expectations.

Data reinforcing expectations of an interest rate hike by the Federal Reserve next month also weighed on the markets.

Before the start of trading, the Labor Department released a report showing a bigger than expected increase in producer prices in the month of April.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in April after edging down by 0.1 percent in March. Economists had expected prices to rise by 0.2 percent.

With the monthly increase, the annual rate of producer price growth accelerated to 2.5 percent in April from 2.3 percent in March. Prices rose at the fastest rate since February of 2012.

Excluding increases in food and energy prices, core producer prices still rose by 0.4 percent in April and were up by 1.9 percent year-over-year.

A separate report from the Labor Department showed that initial jobless claims unexpectedly edged lower in the week ended May 6th.

The report said initial jobless claims dipped to 236,000, a decrease of 2,000 from the previous week's unrevised level of 238,000. Economists had expected jobless claims to rise to 245,000.

Sector News

Despite the recovery attempt by the broader markets, significant weakness remained visible among telecom stocks. The NYSE Arca North American Telecom index fell by 1.5 percent to its lowest closing level in five months.

FairPoint Communications (FRP), Frontier Communications (FTR), and Cincinnati Bell (CBB) turned in some of the telecom sector's worst performances.

Oil service, brokerage, and software stocks also saw some weakness on the day but closed well off their lows of the session.

On the other hand, gold stocks moved sharply higher, driving the NYSE Arca Gold Bugs Index up by 2.7 percent. The strength in the sector comes as gold for June delivery climbed $5.30 to $1,224.20 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index climbed by 0.4 percent.

Meanwhile, European stocks moved mostly lower on the day. While the German DAX Index fell by 0.4 percent, the French CAC 40 Index dipped by 0.3 percent. However, the U.K.'s FTSE 100 Index closed just above the unchanged line.

In the bond market, treasuries saw modest strength after trending lower over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 2.400 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to the latest economic news, with traders likely to keep a close eye on reports on retail sales and consumer prices.

On the earnings front, department store chain J.C. Penney (JCP) is due to release its first quarter results before the start of trading on Friday.