Stocks have moved notably lower over the course of the trading day on Thursday, offsetting the gains posted in the two previous sessions. Lingering concerns about Europe are weighing on the markets along with a negative reaction to the Supreme Court's ruling on Obamacare.
The major averages have climbed off their worst levels of the day but remain firmly in negative territory. The Dow is down 122.76 points or 1 percent at 12,504.25, the Nasdaq is down 38.47 points or 1.3 percent at 2,836.85 and the S&P 500 is down 12.49 points or 0.9 percent at 1,319.36.
The early weakness seen on Wall Street reflected continued concerns about the European debt crisis as European leaders hold a two-day summit in Brussels.
Most traders are not optimistic about the summit resulting in any meaningful solutions, as German Chancellor Angela Merkel has already ruled out the idea of common eurozone bonds.
Peter Boockvar, managing director at Miller Tabak, said, "Those countries in need of help will go hat in hand in a disguised way by trying to convince Germany to be the euro zone insurance company and those not in need will be looking for more central oversight of the debt/growth sinners."
Further selling pressure was seen following the announcement of the Supreme Court's decision to uphold President Obama's healthcare reform law, including the law's individual insurance mandate.
In the landmark ruling, the court upheld nearly all of the healthcare reform law, only limiting the federal government's ability to terminate states' Medicaid funds.
Chief Justice John Roberts joined the liberal members of the court to uphold the individual mandate in a 5-4 vote. The court said the individual mandate would survive as a tax
Meanwhile, traders have largely shrugged off the Labor Department's report on initial jobless claims in the week ended June 23rd.
The report showed that jobless claims dipped to 386,000 from the previous week's revised figure of 392,000. Economists had expected jobless claims to edge down to 385,000 from the 387,000 originally reported for the previous week.
"Bottom line, the jobs picture is still lackluster and certainly getting no help from the slowing global economy," Boockvar said.
A separate report from the Commerce Department showed that U.S. GDP increased by 1.9 percent in the first quarter, unrevised from the previous estimate and in line with the expectations of economists.
Gold stocks are posting particularly steep losses in mid-day trading, dragging the NYSE Arca Gold Bugs Index down by 2.7 percent. The weakness in the gold sector comes amid a sharp drop by the price of the precious metal, with gold for August delivery falling $24.50 to $1,553.90 an ounce.
Significant weakness is also visible among biotechnology stocks, as reflected by the 2.5 percent loss being posted by the NYSE Arca Biotechnology Index.
Banking stocks have also moved sharply lower on the day, resulting in a 2 percent loss by the KBW Bank Index. JP Morgan (JPM) is helping to lead the sector lower amid a New York Times report indicating that the company could face a much wider than estimated trading loss.
Airline, computer hardware, networking, and defense stocks have also come under pressure, moving lower along with most of the major sectors.
Meanwhile, healthcare provider stocks have moved sharply higher following the Supreme Court ruling, driving the Morgan Stanley Healthcare Provider Index up by 3 percent.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. While Japan's Nikkei 225 Index surged up by 1.7 percent, Hong Kong's Hang Seng Index ended the day down by 0.8 percent.
Meanwhile, the major European markets all moved to the downside. The German DAX Index tumbled by 1.3 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index fell by 0.6 percent and 0.4 percent, respectively.
In the bond market, treasuries have moved notably higher amid the pullback by stocks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.8 basis points at 1.573 percent.
by RTT Staff Writer
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