Stocks ended Thursday's trading mostly lower, extending the downward move seen over the course of the three previous sessions. A negative reaction to the latest headlines out of Europe contributed to the continued weakness on Wall Street.
The major averages climbed well off their worst levels going into the close but still ended the day in the red. The Dow fell 92.18 points or 0.7 percent to 12,878.88, the Nasdaq slipped 10.44 points or 0.4 percent to 2,909.77 and the S&P 500 dropped 10.14 points or 0.7 percent to 1,365.00.
Much of the weakness on Wall Street stemmed from a negative reaction to comments by European Central Bank President Mario Draghi, who spoke at a press conference following the central bank's monetary policy meeting.
At the meeting, the ECB decided to leave interest rates unchanged following a quarter basis point cut at its previous meeting last month.
Draghi told reporters that the central bank "may undertake outright open market operations," but traders seemed disappointed that there was not more conviction behind Draghi's remarks.
Last week, Draghi promised to do whatever is necessary to support the beleaguered eurozone, leading to a rally on Wall Street.
Carl Weinberg, Chief Economist at High Frequency Economics, said, "Once again, we have no commitment to action from the ECB, and no execution of promises previously made."
"Nothing seems set to happen now," he added. "Traders and investors who expected immediate action are, and should be, disappointed."
As a result of the focus on Europe, traders largely shrugged off the release of a report from the Labor Department showing a smaller than expected increase in weekly jobless claims.
The report showed that initial jobless claims crept up to 365,000 in the week ended July 28th from the previous week's revised figure of 357,000. Economists had expected jobless claims to climb to 370,000 from the 353,000 originally reported for the previous week.
Friday morning, the Labor Department is scheduled to release a separate report on the employment situation in the month of July.
Economists currently expect the Labor Department report to show that U.S. employment rose by about 100,000 jobs in July following a weaker than expected increase of 80,000 jobs in June. The unemployment rate is expected to remain unchanged at 8.2 percent.
Brokerage stocks saw substantial weakness on the day, with the NYSE Arca Broker/Dealer Index tumbling by 5.3 percent. With the loss, the index ended the session at its lowest closing level in well over three years.
Within the brokerage sector, Knight Capital Group (KCG: Quote) posted a particularly steep loss, plunging by 62.8 percent after revealing that a trading glitch resulted in a $440 million loss.
Natural gas stocks also moved sharply lower, dragging the NYSE Arca Natural Gas Index down by 3.5 percent. Ultra Petroleum (UPL: Quote) and Apache (APA: Quote) turned in two of the sector's worst performances after reporting disappointing second quarter results.
Significant weakness was also visible among steel stocks, as reflected by the 2.7 percent loss posted by the NYSE Arca Steel Index. Banking, tobacco, biotech, and oil stocks also posted notable losses.
Meanwhile, trucking stocks bucked the downtrend, resulting in a 2.1 percent gain by the Dow Jones Trucking Index. The gain lifted the index well off Wednesday's eight-month closing low.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Thursday. Japan's Nikkei 225 Index crept up by 0.1 percent, while Hong Kong's Hang Seng Index ended the day down by 0.7 percent.
Meanwhile, the major European markets turned lower over the course of the trading day. The U.K.'s FTSE 100 Index fell by 0.9 percent, while the German DAX Index and the French CAC 40 Index plummeted by 2.2 percent and 2.7 percent, respectively.
In the bond market, treasuries moved notably higher on the heels of the news out of Europe. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.1 basis points to 1.478 percent.
While monetary policy has been in focus over the past two days, the monthly U.S. jobs report is likely to take center stage on Friday.
The Institute for Supply Management is also due to release a separate report on activity in the service sector, although the data is likely to be overshadowed by the jobs report.
On the earnings front, Kraft Foods (KFT) is among the companies releasing their quarterly results after the close of today's trading, while fellow Dow component Procter & Gamble (PG: Quote) is among those reporting their results before the start of trading on Friday.
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by RTT Staff Writer
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