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Global Economic Worries Continue To Weigh On Wall Street - U.S. Commentary

Stocks continue to see notable weakness in mid-day trading on Thursday amid renewed concerns about the outlook for the global economy. Nonetheless, another batch of upbeat U.S. economic data has helped to limit the downside for the markets.

The major averages are currently off their worst levels of the day but remain firmly in negative territory. The Dow is down 78.37 points or 0.6 percent at 13,046.25, the Nasdaq is down 15.72 points or 0.5 percent at 3,059.60 and the S&P 500 is down 10.58 points or 0.8 percent at 1,392.31.

Much of the weakness on Wall Street stems from the release of some disappointing economic data from overseas, including a report showing a continued contraction in Chinese manufacturing activity.

A report from HSBC showed that its index of activity in the Chinese manufacturing sector fell to 48.1 in March from 49.6 in February, with a reading below 50 indicating a contraction. With the drop, the index suggested that Chinese factory activity shrank for the fifth consecutive month.

Adding to the negative sentiment, a report from Markit Economics indicated that Eurozone private sector activity fell more sharply than expected in March.

Markit Economics said that its composite output index for the Eurozone fell to a three-month low of 48.7 in March from 49.3 in February.

The disappointing overseas data has overshadowed a report from the Labor Department showing that U.S. initial jobless claims fell to a four-year low in the week ended March 17th,

The report showed that initial jobless claims fell to 348,000 from the previous week's revised figure of 353,000. The drop surprised economists, who had expected jobless claims to edge up to 352,000 from the 351,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since coming in at 347,000 in the week ended March 8, 2008.

A separate report from the Conference Board showed that its index of leading U.S. economic indicators rose by slightly more than expected in February, pointing to a more positive outlook for U.S. economic activity in the first half of 2012.

Among individual stocks, shares of FedEx (FDX) are under pressure even though the delivery giant reported better than expected adjusted third quarter earnings and provided upbeat full-year guidance. FedEx is down by 4.3 percent amid the concerns about demand in China.

Sector News

With traders expressing concerns about the outlook for global demand, steel stocks are posting particularly steep losses. Reflecting the weakness in the steel sector, the NYSE Arca Steel Index has tumbled by 3.1 percent.

Mechel (MTL), Ternium (TX), and Arcelor Mittal (MT) are turning in some of the steel sector's worst performances on the day.

Energy stocks have also moved sharply lower on the day, as the global demand worries have led to a notable drop by the price of crude oil. Crude for May delivery has plunged $2.11 to $105.16 a barrel.

Significant weakness has also emerged among transportation stocks, as reflected by the 2 percent loss being posted by the Dow Jones Transportation Average. Overseas Shipholding Group (OSG) and Con-Way (CNW) are posting notable losses.

Gold, housing, and chemical stocks have also come under pressure on the day, moving lower along with most of the major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a lackluster performance on Thursday, ending the day mixed. Japan's Nikkei 225 Index rose by 0.4 percent, while China's Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets have all shown notable moves to the downside on the day. While the U.K.'s FTSE 100 Index is down by 0.8 percent, the German DAX Index and the French CAC 40 Index have fallen by 1.4 percent and 1.5 percent, respectively.

In the bond market, treasuries have moved moderately higher amid the global economic worries. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.7 basis points at 2.267 percent.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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