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Stocks Showing Wild Swings As Trading Day Progresses - U.S. Commentary


After initially showing a lack of direction, stocks have shown wild swings over the course of the trading session on Thursday. The tech-heavy Nasdaq tumbled to its lowest intraday level in over four months in late morning trading but has climbed back near the unchanged line since then.

Currently, the major averages are all in negative territory, although the Nasdaq is down just 7.87 points or 0.1 percent at 7,414.18. The Dow is down 120.31 points or 0.5 percent at 25,478.43 and the S&P 500 is down 16.99 points or 0.6 percent at 2,768.69.

The volatility on Wall Street comes as traders are keeping a close eye on treasury yields, which came under pressure following the release of a Labor Department report showing a slight uptick in consumer prices in September.

The Labor Department said its consumer price index inched up by 0.1 percent in September after rising by 0.2 percent in August. Economists had expected prices to increase by another 0.2 percent.

Excluding food and energy prices, core consumer prices also crept up by 0.1 percent in September, matching the uptick seen in the previous month. Core prices had been expected to rise by 0.2 percent.

The report also said the annual rate of consumer price growth slowed to 2.3 percent in September from 2.7 percent in August, while the annual rate of core consumer price growth was unchanged at 2.2 percent.

"Overall, the September figures confirm that core inflation has lost a little momentum in recent months, and the stronger dollar will put downward pressure on goods prices over the coming year or so," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "But with activity growth still strong and underlying inflation in the services sector still trending higher, we suspect the Fed will continue to raise interest rates over the coming quarters."

A separate report released by the Labor Department unexpectedly showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended October 6th.

The report said initial jobless claims rose to 214,000, an increase of 7,000 from the previous week's unrevised level of 207,000. Economists had expected jobless claims to edge down to 206,000.

Sector News

Energy stocks are turning in some of the market's worst performances on the day, extending the sell-off seen in the previous session.

The continued weakness among energy stocks comes as the price of crude oil for November delivery is tumbling $1.74 to $71.43 a barrel following the release of a report showing a much bigger than expected weekly increase in crude oil inventories.

Reflecting the weakness in the energy sector, the NYSE Arca Natural gas Index has plunged by 1.9 percent and the NYSE Arca Oil Index has slumped by 1.7 percent.

Considerable weakness is also visible among telecom stocks, as reflected by the 1.7 percent drop by the NYSE Arca North American Telecom Index. The index has fallen to its lowest intraday level in a month.

Pharmaceutical, housing, and commercial real estate stocks are also seeing notable weakness, while gold stocks have moved sharply higher along with the price of the precious metal.

With gold for December soaring $29.60 to $1,223.00 an ounce, the NYSE Arca Gold Bugs Index is spiking by 5 percent to a nearly two-month intraday high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific moved sharply lower on Thursday following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index plummeted by 3.9 percent, while Hong Kong's Hang Seng Index slumped by 3.5 percent.

The major European markets also showed substantial moves to the downside on the day. While the German DAX Index tumbled by 1.5 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both plunged by 1.9 percent.

In the bond market, treasuries have moved significantly higher over the course of the trading session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6 basis points at 3.165 percent.

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