After seeing considerable volatility in morning trading on Thursday, stocks moved mostly lower in the afternoon and ended the day in the red. A batch of largely disappointing U.S. economic data weighed on the markets, offsetting positive sentiment generated by some upbeat banking earnings.
The major averages climbed off their worst levels going into the close but remained firmly negative. The Dow dropped 68.65 points or 0.5 percent to 12,964.10, the Nasdaq fell 23.89 points or 0.8 percent to 3,007.56 and the S&P 500 slid 8.22 points or 0.6 percent to 1,376.92.
The weakness that emerged on Wall Street came as traders reacted to a slew of U.S. economic data, including a Labor Department report showing that jobless claims came in well above economist estimates in the week ended April 14th.
While jobless claims edged down to 386,000 from the previous week's revised figure of 388,000, the figure still came in well above economist estimates of 365,000.
"Discouraging news on initial jobless claims suggest job growth is slowing," said Jennifer Lee, senior economist at BMO Capital Markets. "Still growing, mind you, but at a slower pace."
The National Association of Realtors also released a report showing an unexpected drop in existing home sales in the month of March.
The report said existing home sales fell 2.6 percent to an annual rate of 4.48 million in March from an upwardly revised 4.60 million in February. The drop surprised economists, who had expected existing home sales to edge up to 4.62 million.
The Philadelphia Federal Reserve also reported that its index of regional manufacturing activity fell to 8.5 in April from 12.5 in March, although a positive reading still indicates growth. Economists had expected the index to edge down to a reading of 12.0.
Meanwhile, traders largely shrugged off a separate report from the Conference Board showing that its leading economic index for the U.S. increased for the sixth consecutive month in March.
The disappointing economic data overshadowed better than expected first quarter earnings from financial giants Bank of America (BAC) and Morgan Stanley (MS).
While Bank of America reported first quarter earnings of $0.03 per share compared to $0.17 per share a year ago, the results included an accounting charge of $0.28 per share. Excluding the charge, the company earned $0.31 per share versus analyst estimates for $0.12 per share.
Morgan Stanley reported a first quarter net loss of $0.06 per share but reported a profit of $0.71 per share excluding a big accounting charge. Analysts had expected the company to earn $0.44 per share.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. While Japan's Nikkei 225 Index ended the day down by 0.8 percent, Hong Kong's Hang Seng Index closed up by 1 percent.
Meanwhile, the major European markets all ended the day in the red. The U.K.'s FTSE 100 Index closed just below the unchanged line, while the German DAX Index fell by 0.9 percent and the French CAC 40 Index tumbled 2.1 percent.
In the bond market, treasuries moved to the upside on the heels of the disappointing U.S. economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to a one-month closing low of 1.952 percent.
Telecom stocks saw substantial weakness on the day, dragging the NYSE Arca Telecom Index down by 4.3 percent. With the loss, the index ended the session at its lowest closing level in over a month.
Qualcomm (QCOM) turned in one of the telecom sector's worst performances, tumbling by 6.6 percent after reporting better than expected second quarter results but providing disappointing guidance.
Significant weakness also emerged among transportation stocks, as reflected by the 1.4 percent loss posted by the Dow Jones Transportation Average. Union Pacific (UNP) and Con-Way (CNW) turned in two of the sector's worst performances.
Electronic storage, steel, and semiconductor stocks also posted notable losses, although selling pressure was somewhat subdued.
Meanwhile, some biotech stocks posted strong gains, with Human Genome Sciences (HGSI) surging up by 97.6 percent on news that the company rejected a takeover bid from GlaxoSmithKline (GSK) valuing the company at $2.6 billion.
Considerable strength among airline and health insurance stocks also helped to limit the downside for the broader markets.
Amid a lack of major U.S. economic data on Friday, the latest earnings news may attract even more attention than usual.
Microsoft (MSFT), Advanced Micro Devices (AMD), and Capital One (COF) are among the companies releasing their quarterly results after today's trading, while General Electric (GE), McDonald's (MCD), and Honeywell (HON) are among those reporting before the start of Friday's trading.
by RTT Staff Writer
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