Stocks showed a lack of direction throughout the trading day on Thursday as traders digested a mixed batch of economic data. Uncertainty ahead of Friday's monthly jobs report also contributed to the lack of conviction among traders.
The major averages eventually ended the day in negative territory, although the Nasdaq posted a very slim loss. While the Nasdaq edged down 0.18 points or less than 0.1 percent to 3,142.13, the Dow fell 49.84 points or 0.4 percent to 13,860.58 and the S&P 500 slid 3.85 points or 0.3 percent to 1,498.11.
The lackluster performance on Wall Street came as traders expressed uncertainty about whether the recent batch of economic data supports any further upside for the markets.
Following yesterday's disappointing fourth quarter GDP report, the Labor Department released a report before the start of trading showing a bigger than expected rebound by weekly jobless claims.
The Labor Department said initial jobless claims rose to 368,000 in the week ended January 26th, an increase of 38,000 from the previous week's unrevised figure of 330,000. Economists had been expecting jobless claims to climb to 350,000 after hitting a five-year low in the previous week.
While bigger than expected, Jennifer Lee, senior economist at BMO Capital, said the rebound was not too shocking, adding, "And it was encouraging that the bounceback did not completely erase the two weekly improvements."
Helping to offset the negative sentiment generated by the report was a separate report from the Institute for Supply Management - Chicago showing a notable improvement in business activity in the Chicago-area in the month of January.
The ISM Chicago said its Chicago business barometer climbed to 55.6 in January from a revised 50.0 in December, with a reading above 50 indicating growth.
The Commerce Department also released a report showed a substantial increase in personal income in December, although the jump was due in large part to accelerated dividend and bonus payments ahead of the year-end tax increases.
Among individual stocks, Dow Chemical (DOW) came under pressure after reporting adjusted fourth quarter earnings that fell short of analyst estimates. Shares of Dow fell by 7 percent.
Delivery giant UPS (UPS) also posted a notable loss after reporting weaker than expected fourth quarter earnings and forecasting 2013 earnings below expectations.
On the other hand, shares of Qualcomm (QCOM) jumped 3.9 percent after the chip maker reported better than expected first quarter results and provided upbeat guidance.
Most of the major sectors showed only modest moves on the day, although considerable strength was visible among networking stocks. The NYSE Arca Networking Index surged up by 2.2 percent, regaining some ground after ending the two previous sessions sharply lower.
Infinera (INFN), Alcatel-Lucent (ALU), and Ciena (CIEN) turned in some of the networking sector's best performances.
On the other hand, gold stocks came under pressure, with a notable decrease by the price of gold weighing on the sector. With gold for April delivery sliding $19.60 to $1,662 an ounce, the NYSE Arca Gold Bugs Index fell by 1.1 percent.
Defense stocks also showed a significant move to the downside, dragging the Philadelphia Defense Sector Index down by 1.2 percent. General Dynamics (GD), General Dynamics (LLL), and Raytheon (RTN) posted notable losses.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.
Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index slid by 0.9 percent, the U.K.'s FTSE 100 Index dropped by 0.7 percent and the German DAX Index slipped by 0.5 percent.
In the bond market, treasuries saw modest strength after coming under pressure in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.1 basis points to 1.985 percent.
Trading on Friday is likely to be driven by reaction to the Labor Department's monthly jobs report, which is expected to show an increase about 180,000 jobs.
While reports on manufacturing activity, consumer sentiment, and construction spending are also due to be released, the data is likely to be overshadowed by the jobs numbers.
On the earnings front, Exxon Mobil (XOM), Merck (MRK), Chevron (CVX), Mattel (MAT), and Tyson Foods (TSN) are among the companies scheduled to release their quarterly results before the start of trading on Friday.
by RTT Staff Writer
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