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Stocks May Extend Yesterday's Modest Pullback - U.S. Commentary

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After ending the previous session modestly lower, stocks may see some further downside in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 141 points.

Concerns about the global economy may weigh on Wall Street after the European Commission lowered its eurozone growth forecast.

The European Commission slashed its GDP growth forecast for 2019 to 1.3 percent from 1.9 percent and lowered its estimate for growth in 2020 to 1.6 percent from 1.7 percent.

The downgrade reflected external factors, such as trade tensions and the slowdown in emerging markets, notably in China.

Officials warned that the European outlook faces substantial risks due to the uncertainty about Brexit and the slowdown in China.

A steep drop by shares of Twitter (TWTR) may also generate negative sentiment, as the social media giant reported better than expected fourth quarter results but forecast a jump in expenses this year.

On the U.S. economic front, a report from the Labor Department showed first-time claims for U.S. unemployment benefits pulled back less than expected in the week ended February 2nd after the jump seen in the previous week.

The report said initial jobless claims fell to 234,000, a decrease of 19,000 from the previous week's unrevised level of 253,000. Economists had expected jobless claims to drop to 221,000.

Stocks turned in a relatively lackluster performance during trading on Wednesday before ending the session modestly lower. With the drop on the day, the major averages pulled back off their best closing levels in two months.

The major averages ended the day in negative territory but off their lows of the session. The Dow edged down 21.22 points or 0.1 percent to 25,390.30, the Nasdaq fell 26.80 points or 0.4 percent to 7,375.28 and the S&P 500 slipped 6.09 points or 0.2 percent to 2,731.61.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday, with markets in Hong Kong and mainland China still closed for holidays. Japan's Nikkei 225 Index fell by 0.6 percent, while Australia's S&P/ASX 200 Index jumped by 1.1 percent.

Meanwhile, the major European markets have all moved to the downside. While the German DAX Index has plunged by 1.9 percent, the French CAC 40 Index is down by 1.1 percent and the U.K.'s FTSE 100 Index is down by 0.4 percent.

In commodities trading, crude oil futures are sliding $0.67 to $53.34 a barrel after rising $0.35 to $54.01 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,311.80, down $2.60 compared to the previous session's close of $1,314.40. On Wednesday, gold fell $4.80.

On the currency front, the U.S. dollar is trading at 109.71 yen compared to the 109.97 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1335 compared to yesterday's $1.1362.

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