Stocks Close Modestly Lower Following Lackluster Session - U.S. Commentary

(RTTNews) - After moving higher over the course of the two previous sessions, stocks turned in a relatively lackluster performance during trading on Thursday. The major averages spent much of the day bouncing back and forth across the unchanged line.

Eventually, the major averages finished the session modestly lower. The Dow dipped 40.27 points or 0.2 percent to 18,162.35, the Nasdaq edged down 4.58 points or 0.1 percent to 5,241.83 and the S&P 500 slipped 2.95 points or 0.1 percent to 2,141.34.

The choppy trading on Wall Street came as traders digested the European Central Bank's monetary policy decision as well as the latest U.S. economic and earnings news.

As was widely expected, the ECB announced its decision to leave interest rates unchanged and confirmed 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 risks to euro area growth outlook remain tilted to the downside.

Draghi claimed that the ECB's governing council did not have any discussions about tapering or extending its quantitative easing program.

On the U.S. economic front, the Labor Department released a report showing a bigger than expected increase in initial jobless claims in the week ended October 15th.

The Labor Department said initial jobless claims climbed to 260,000, an increase of 13,000 from the previous week's revised level of 247,000. Economists had expected jobless claims to inch up to 250,000.

The revised figure for the previous week is up from 246,000 in the week ended October 1st, which represents the lowest number of claims since November of 1973.

A separate report from the National Association of Realtors showed a much bigger than expected rebound in existing home sales in the month of September.

NAR said existing home sales jumped by 3.2 percent to an annual rate of 5.47 million in September after falling by 1.5 percent to a downwardly revised rate of 5.30 million in August.

Economists had expected existing home sales to inch up by 0.4 percent to a rate of 5.35 million from the 5.33 million originally reported for the previous month.

Meanwhile, shares of eBay (EBAY) fell sharply on the day after the e-commerce giant reported slightly better than expected third quarter results but provided disappointing guidance.

Insurance giant Travelers (TRV) also came under pressure after reporting third quarter earnings that fell sharply due to higher weather-related losses.

On the other hand, shares of American Express (AXP) showed a strong move to the upside after the credit card giant reported better than expected third quarter earnings and raised its full-year forecast.

Sector News

Many of the major sectors ended the day showing only modest, contributing to the lackluster close by the broader markets.

Railroad stocks saw substantial weakness, however, with the Dow Jones Railroads Index plunging by 4.6 percent. With the steep drop, the index fell to its lowest closing level in over a month.

Union Pacific (UNP) led the sector lower after the rail giant reported third quarter earnings that fell year-over-year and came in below analyst estimates.

Significant weakness was also visible among oil service stocks, which pulled back along with the price of crude oil. The Philadelphia Oil Service Index tumbled by 2.3 percent after jumping by 2.6 percent on Wednesday.

Brokerage and housing stocks also saw notable weakness on the day, while some strength was visible among steel and biotechnology stocks.

Other Markets

In overseas trading, major markets in the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index surged up by 1.4 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

The major European markets also moved to the upside over the course of the trading day. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index and the German DAX Index climbed by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries continued to show a lack of direction before closing roughly flat for the second straight day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.747 percent.

Looking Ahead

Amid a quiet day on the U.S. economic front, trading on Friday is likely to be driven by reaction to the latest batch of earnings news.

Software giant Microsoft (MSFT) is among the companies releasing their quarterly results after the close of today's trading.

General Electric (GE), Honeywell (HON), and McDonald's (MCD) are also due to report their results before the start of trading on Friday.