Stocks Close Modestly Lower Following Volatile Trading Day - U.S. Commentary

(RTTNews) - After moving mostly higher over the course of the two previous sessions, stocks saw considerable volatility during trading on Thursday. The major averages spent the session bouncing back and forth across the unchanged line before closing modestly lower.

While the major averages ended the day in the red, they were well off their worst levels. The Dow dipped 12.52 points or 0.1 percent to 17,900.10, the Nasdaq edged down 5.04 points or 0.1 percent to 4,769.44 and the S&P 500 slipped 2.41 points or 0.1 percent to 2,071.92.

The choppy trading came in reaction to remarks by European Central Bank President Mario Draghi, who spoke to reporters following the bank's decision to keep interest rates unchanged at record lows.

While Draghi reiterated that the ECB remains committed to providing additional stimulus if needed, some traders had anticipated that the bank would adopt quantitative easing today.

Draghi said the bank's Governing Council will wait until next quarter to reassess current stimulus and specifically called for an evaluation of the impact of the recent drop in oil prices.

The ECB president also said the bank's real GDP growth forecasts for 2014 through 2016 have been revised substantially downward and said the risks for the outlook remain on the downside.

The news out of Europe largely overshadowed a U.S. Labor Department report showing that initial jobless claims pulled back below 300,000 in the week ended November 29th.

The report said initial jobless claims fell to 297,000, a decrease of 17,000 from the previous week's revised level of 314,000. Economists had expected jobless claims to pull back to 295,000.

The previous week marked the first time jobless claims topped the key 300,000 level since the week ended September 6th.

Friday morning, the Labor Department is scheduled to release its more closely watched monthly jobs report for November.

Sector News

While many of the major sectors ended the day showing only modest moves, substantial weakness was visible among gold stocks. Reflecting the weakness in the gold sector, the NYSE Arca Gold Bugs Index tumbled by 2.5 percent.

The weakness among gold stocks came amid a modest decrease by the price of the precious metal, with gold for February delivery slipping $1 to $1,207.70 an ounce.

Railroad stocks also saw significant weakness on the day, dragging the Dow Jones Railroads Index down by 1.7 percent. The index has seen considerable volatility over the past few sessions after reaching a record high last week.

Notable weakness was also visible among natural gas stocks, as reflected by the 1.7 percent loss posted by the NYSE Arca Natural Gas Index. A sharp drop by the price of natural gas contributed to the weakness in the sector.

On the other hand, airline stocks moved sharply higher on the day, driving the NYSE Arca Airline Index up by 1.8 percent. With the gain, the index reached a new twelve-year closing high.

Other Markets

In overseas trading, many of the stock markets across the Asia-Pacific region saw considerable strength on Thursday. Japan's Nikkei 225 Index advanced by 0.9 percent, Hong Kong's Hang Seng Index jumped by 1.7 percent and China's Shanghai Composite Index soared by 4.3 percent.

Meanwhile, the major European markets all came under pressure over the course of the session. While the U.K.'s FTSE 100 Index fell by 0.6 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.2 percent and 1.6 percent, respectively.

In the bond market, treasuries moved moderately higher after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped 3 basis points to 2.257 percent.

Looking Ahead

The Labor Department's monthly jobs report is likely to take the spotlight on Friday, with economists expecting an increase of about 230,000 jobs in November.

While the jobs report is likely to be in focus, traders will also be presented with reports on U.S. trade, factory orders, and consumer credit.