While stocks moved sharply lower in early trading on Thursday, the markets staged a notable recovery attempt over the course of the session. Selling pressure re-emerged in late-day trading, however, resulting in a lower close.
The major averages all ended the day in the red but well off their worst levels of the day. The Dow edged down 26.41 points or 0.2 percent to 12,393.45, the Nasdaq fell 10.02 points or 0.4 percent to 2,827.34 and the S&P 500 slipped 2.99 points or 0.2 percent to 1,310.33.
The sell-off seen in early trading came as traders reacted negatively to a slew of U.S. economic data, including reports providing further signs of sluggishness in the labor market.
Considerable selling pressure was generated by a report from payroll processor ADP showing weaker than expected private sector job growth.
ADP said private sector employment rose by 133,000 jobs in May following a downwardly revised increase of 113,000 jobs in April. Economists had expected an increase of about 154,000 jobs.
A separate report from the Labor Department showed that initial jobless claims rose to 383,000 in the week ended May 26th from the previous week's revised figure of 373,000. Jobless claims had been expected to come in unchanged at the 370,000 originally reported for the previous week.
A Commerce Department report showing slower than previously estimated first quarter GDP growth also helped to drag stocks lower along with a report showing that Chicago-area business activity expanded at a much slower rate in the month of May.
The recovery attempt by the markets was spurred in part by reports that the International Monetary Fund is in talks to provide a bailout to Spain, although the IMF later denied the reports.
Meanwhile, the pullback seen going into the close came as traders expressed caution ahead of the release of the Labor Department's closely watched monthly employment report on Friday.
Most of the major sectors ended the session showing only modest moves, although considerable weakness remained visible among oil service stocks. The Philadelphia Oil Service Index fell 1.7 percent but ended the session well off its worst levels.
The weakness among oil service stocks came amid a continued decrease by the price of crude oil, with crude for July delivery sliding $1.29 to $86.53 a barrel.
Steel stocks also saw continued weakness, adding to the steep losses posted in the previous session. The NYSE Arca Steel Index dropped 1.9 percent to its lowest closing level in over seven months.
Biotechnology, health insurance, and computer hardware stocks also ended the day firmly in the red but well off their lows for the session.
On the other hand, significant strength emerged among airline stocks, as reflected by the 2.8 percent gain posted by the NYSE Arca Airline Index. JetBlue (JBLU) helped to lead the sector higher, surging up by 9.9 percent after being upgraded to Buy from Neutral by UBS.
Banking and railroad stocks also moved to the upside over the course of the trading day, helping the markets to recovery from the early weakness.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index fell by 1.1 percent, while Hong Kong's Hang Seng Index edged down by 0.3 percent.
Meanwhile, the major European markets turned mixed over the course of the trading day. While the German DAX Index dipped 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index crept up by 0.2 percent and 0.1 percent, respectively.
In the bond market, treasuries extended yesterday's rally on the heels of the disappointing economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price fell by 4.4 basis points to a new record closing low of 1.581 percent.
U.S. economic data is likely to remain in focus on Friday, with all eyes likely to be on the Labor Department's monthly employment report.
Economists expect the report to show an increase of about 150,000 jobs in May compared to an increase of 115,000 jobs in April. At the same time, the unemployment rate is expected to remain unchanged at 8.1 percent.
The monthly jobs report is likely to overshadow separate reports on personal income and spending, national manufacturing activity, and construction spending.
by RTT Staff Writer
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