Stocks have moved sharply lower over the course of the trading day on Thursday after ending the previous session roughly flat. Despite the steep losses on the day, the major averages currently remain stuck in a recent trading range.
The major averages have moved roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is down 117.19 points or 0.8 percent at 13,869.33, the Nasdaq is down 23.63 points or 0.8 percent at 3,144.85 and the S&P 500 is down 10.67 points or 0.7 percent at 1,501.45.
The weakness that has emerged on Wall Street is partly due to profit taking following the recent strength in the markets, which lifted the Dow and the S&P 500 to five-year highs last Friday.
Uncertainty about the financial situation in Europe may also be weighing in the markets following comments by European Central Bank President Mario Draghi.
While Draghi said European economic activity should gradually recover later in 2013, he warned that the risks surrounding the economic outlook for the euro area continue to be on the downside.
Draghi's remarks came after the ECB left interest rates unchanged despite concerns about the recent appreciation in the value of the euro.
Selling pressure has also been generated by worries about whether lawmakers in Washington will be unable to reach an agreement to avoid the automatic spending cuts currently due to go into effect at the end of the month.
President Barack Obama has called on Congress to pass a smaller budget package in order to temporarily delay the automatic cuts for a few months, although Republicans have expressed opposition to the idea.
Traders are also digesting a mixed batch of U.S. economic data regarding weekly jobless claims and fourth quarter productivity.
The Labor Department released a report before the start of trading showing that first-time claims for U.S. unemployment benefits showed a modest decrease in the week ended February 2nd, although claims remain well above the five-year low set last month.
The report showed that initial jobless claims dipped to 366,000, a decrease of 5,000 from the previous week's revised figure of 371,000.
However, the Labor Department also released a separate report showing a bigger than expected drop in labor productivity in the fourth quarter, with a notable increase in hours worked more than offsetting a modest increase in output.
Housing stocks have shown a substantial move to the downside on the day, dragging the Philadelphia Housing Sector Index down by 1.9 percent. Radian Group (RDN) and M/I Homes (MHO) are turning in two of the sector's worst performances.
Significant weakness has also emerged among biotechnology stocks, as reflected by the 1.6 percent loss being posted by the NYSE Arca Biotechnology Index. With the loss, the index is pulling back further off the record closing high that it set on Tuesday.
Pharmaceutical stocks have also come under pressure, with Sanofi (SNY) leading the sector lower after reporting a sharp decline in its fourth quarter profits. Sanofi is currently down by 5.8 percent, contributing to a 1.3 percent drop by the NYSE Arca Pharmaceutical Index.
Steel, semiconductor, computer hardware, and airline stocks are also posting notable losses on the day, moving lower along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index fell by 0.9 percent, while Hong Kong's Hang Seng Index ended the day down by 0.3 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index inched up by 0.1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index dropped by 1.1 percent and 1.2 percent, respectively.
In the bond market, treasuries have moved to the upside over the course of the session, climbing further off their recent lows. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.1 basis points at 1.937 percent.
by RTT Staff Writer
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