With disappointing housing data offsetting early buying interest, stocks turned lower over the course of the trading day on Thursday. Profit taking following recent strength also contributed to the downturn by the markets.
The major averages climbed off their worst levels of the day going into the close but still ended the session in the red. The Dow edged down 22.33 points or 0.2 percent to 12,734.63, the Nasdaq fell 13.03 points or 0.5 percent to 2,805.28 and the S&P 500 slid 7.60 points or 0.6 percent to 1,318.45.
The early strength on Wall Street came as traders continued to react positively to Wednesday's statement from the Federal Reserve indicating that the central bank expects to keep interest rates at exceptionally low levels at least through late 2014.
An upbeat report from the Commerce Department also contributed to the early buying interest, with the report showing a bigger than expected increase in durable goods orders in the month of December.
However, a report from the Labor Department showing that initial jobless claims rebounded by a little more than anticipated in the week ended January 21st helped to limit the upside for the markets.
The Labor Department said jobless claims rose to 377,000 from the previous week's revised figure of 356,000, while economists had expected jobless claims to increase to 370,000.
A separate report from the Commerce Department showing an unexpected drop in new home sales contributed to the subsequent pullback by the markets.
The report showed that new home sales fell 2.2 percent to an annual rate of 307,000 in December from the revised November rate of 314,000. The drop surprised economists, who had expected new home sales to increase to an annual rate of 320,000.
Teunis Brosens, Senior Economist at ING Bank, said, "Today's report serves as a reality check after the recent run of upbeat housing data."
"The failure of new home sales to pick up shows that while the housing market may slowly be recovering, the road to normality will be very long," he added.
Among individual stocks, shares of AT&T (T) fell by 2.5 percent after the telecom giant reported slightly weaker than expected fourth quarter adjusted earnings despite seeing stronger than expected revenue growth.
Meanwhile, Caterpillar (CAT) rose by 2.1 percent after the construction equipment manufacturer reported stronger than expected fourth quarter earnings growth.
Diversified manufacturer 3M (MMM) also ended the day higher after reporting better than expected fourth quarter results.
Sector News
Electronic storage stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Disk Drive Index down by 3.4 percent. The loss by the index came after it ended the previous session at its best closing level in almost six months.
Within the storage sector, Quantum (QTM) and SanDisk (SNDK) posted steep losses after providing disappointing guidance, falling by 13.5 percent and 11.4 percent, respectively.
Considerable weakness was also visible among brokerage stocks, as reflected by the 2.4 percent loss posted by the NYSE Arca Broker/Dealer Index. Online broker E*Trade (ETFC) turned in one of the sector's worst performances after reporting an unexpected fourth quarter loss.
Natural gas stocks also came under pressure, moving lower along with the price of natural gas. With natural gas for February delivery falling $0.124 to $2.605 per million BTUs, the NYSE Arca Natural Gas Index tumbled by 2.4 percent.
While banking, telecom, and oil stocks also saw notable weakness on the day, strong gains by tobacco, trucking, and airline stocks helped to limit the downside for the markets.
Other Markets
In overseas trading, stock markets in the Asia-Pacific region turned in a mixed performance on Thursday, although several markets were closed for public holidays. While Japan's Nikkei 225 Index ended the day down by 0.4 percent, Hong Kong's Hang Seng Index jumped by 1.6 percent.
Meanwhile, the major European markets all showed notable moves to the upside on the day. The German DAX Index surged up by 1.8 percent, the French CAC 40 Index soared by 1.5 percent, and the U.K.'s FTSE 100 Index advanced by 1.3 percent.
In the bond market, treasuries saw significant strength on the day, extending the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 7.6 basis points to 1.931 percent.
Looking Ahead
Trading on Friday is likely to be impacted by the release of the Commerce Department's initial report on U.S. fourth quarter GDP. Economists expect GDP to increase by about 3.1 percent compared to the 1.8 percent growth seen in the third quarter.
On the earnings front, Chevron (CVX), Ford (F), Honeywell (HON), and Procter & Gamble (PG) are among the companies due to release their quarterly results before the start of trading on Friday.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.