Stocks Close Notably Lower For Second Consecutive Session - U.S. Commentary

(RTTNews) - Stocks moved notably lower during trading on Thursday but managed to end the session off their worst levels of the day. The losses still extended the drop seen in the previous session, with the Dow and the S&P 500 pulling back further off their record highs.

The major averages ended the day firmly in negative territory. The Dow tumbled 167.16 points or 1 percent to 16,446.81, the Nasdaq dropped 31.33 points or 0.8 percent to 4,069.29 and the S&P 500 lid 17.68 points or 0.9 percent to 1,870.85.

The continued weakness on Wall Street partly reflected disappointing earnings news from Wal-Mart (WMT), with the retail giant falling by 2.4 percent on the day.

The drop by Wal-Mart came after the company reported first quarter earnings that missed analyst estimates and forecast weaker than expected second quarter earnings.

A negative reaction to a mixed batch of U.S. economic data also weighed on the markets, with disappointing readings on industrial production and homebuilder confidence seemingly overshadowing an upbeat jobs report.

Before the start of trading, the Federal Reserve released a report showing an unexpected drop in industrial production in the month of April.

The Fed said industrial production fell by 0.6 percent in April following an upwardly revised 0.9 percent increase in March. Economists had expected production to come in unchanged.

The National Association of Home Builders released a separate report showing that homebuilder confidence has unexpectedly deteriorated in the month of May.

The report showed that the NAHB/Wells Fargo Housing Market Index edged down to 45 in May from a revised 46 in April. The drop surprised economists, who had expected the index to climb to a reading of 49 from the 47 originally reported for the previous month.

With the unexpected decrease, the Housing Market Index dropped to its lowest level since hitting 44 in May of 2013.

On the other hand, the Labor Department released a report showing that initial jobless claims fell to a seven-year low in the week ended May 10th.

The Labor Department said initial jobless claims fell to 297,000, a decrease of 24,000 from the previous week's revised level of 321,000. The drop pulled jobless claims down to their lowest level since hitting a matching number in the week ended May 12, 2007.

Sector News

Brokerage stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Broker/Dealer Index down by 2.2 percent. With the loss, the index ended the session at its lowest closing level in a month.

Within the brokerage sector, E*Trade (ETFC) and Charles Schwab (SCHW) posted notable losses, tumbling by 4.7 percent and 4.6 percent, respectively.

Significant weakness was also visible among biotechnology stocks, as reflected by the 1.8 percent loss posted by the NYSE Arca Biotechnology Index. Incyte (INCY) helped lead the sector lower amid a negative reaction to the results of a study on its pancreatic cancer drug.

Gold stocks also saw considerable weakness, resulting in a 1.7 percent drop by the NYSE Arca Gold Bugs Index. The weakness in the sector came as gold for June delivery fell $12.30 to $1,293.60 an ounce.

Defense, chemical, and oil service stocks were also under pressure on the day, although most of the major sectors ended the session off their worst levels.

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 0.8 percent, while Hong Kong's Hang Seng Index advanced by 0.7 percent.

Meanwhile, the major European markets all came under pressure on the day. While the U.K.'s FTSE 100 Index dropped by 0.6 percent, the German DAX Index and the French CAC 40 Index tumbled by 1 percent and 1.3 percent, respectively.

In the bond market, treasuries extended the upward move seen in the two previous sessions but closed off their highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.1 basis points to 2.502 percent.

Looking Ahead

Following today's slew of data, the economic calendar for Friday is relatively quiet, although traders are still likely to keep an eye on reports on housing starts and consumer sentiment.

On the earnings front, Applied Materials (AMAT), J.C. Penney (JCP), Autodesk (ADSK), and Nordstrom (JWN) are among the companies releasing their quarterly results after the close of today's trading.