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Major Averages Close Mixed After Seeing Early Strength - U.S. Commentary


After seeing strength for much of the session, stocks turned mixed in afternoon trading on Thursday. While the Dow and the S&P 500 managed to end the day in positive territory, the tech-heavy Nasdaq edged modestly lower.

While the Nasdaq edged down 8.14 points or 0.1 percent to 7,210.09, the Dow climbed 164.70 points or 0.7 percent to 24,962.48 and the S&P 500 inched up 2.63 points or 0.1 percent at 2,703.96.

The strength seen in morning trading came amid a rebound by treasuries, which came under pressure following the release of the minutes of the Federal Reserve's latest monetary policy meeting on Wednesday.

The yield on the benchmark ten-year note, which moves opposite of its price, is pulling back off the four-year closing high set in the previous session.

On the U.S. economic front, a report released by the Labor Department unexpectedly showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended February 17th.

The report said initial jobless claims dipped to 222,000, a decrease of 7,000 from the previous week's revised level of 229,000.

The drop surprised economists, who had expected jobless claims to come in unchanged compared to the 230,000 originally reported for the previous month.

A separate report from the Conference Board showed a bigger than expected increase by its index of leading economic indicators in the month of January.

The Conference Board said its leading economic index jumped by 1.0 percent in January after climbing by 0.6 percent in December. Economists had been expecting another 0.6 percent increase.

"While the recent stock market volatility will not be reflected in the U.S. LEI until next month, consumers' and business' outlook on the economy had been improving for several months and should not be greatly impacted," said Ataman Ozyildirim, Director of Business Cycles and Growth Research at the Conference Board.

He added, "The leading indicators reflect an economy with widespread strengths coming from financial conditions, manufacturing, residential construction, and labor markets."

Sector News

Gold stocks showed a significant move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 1.6 percent. The weakness in the sector came despite a modest increase by the price of gold.

Considerable weakness also emerged among banking stocks, as reflected by the 1.4 percent drop by the KBW Bank Index.

Tobacco and telecom stocks also saw notable weakness, while energy stocks moved sharply higher amid an increase by the price of crude oil.

Crude oil for April delivery jumped $1.09 to $62.77 a barrel following the release of a report showing an unexpectedly weekly drop in crude oil inventories.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index slumped by 1.1 percent, while China's Shanghai Composite Index jumped by 2.2 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index inched up by 0.1 percent, the German DAX Index edged down by 0.1 percent and the U.K.'s FTSE 100 Index fell by 0.4 percent.

In the bond market, treasuries regained ground following the notable decline seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 2.917 percent.

Looking Ahead

Amid a quiet day on the U.S. economic calendar, trading on Friday may be impacted by reaction to comments from several Federal Reserve officials.

On the earnings front, Dillard's (DDS), First Solar (FSLR), GoDaddy (GDDY), Hewlett Packard Enterprise (HPE), HP Inc. (HP), and Intuit (INTU) are among the companies releasing their quarterly results after the close of today's trading.

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