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Stocks Give Back Ground After Initial Upward Move - U.S. Commentary

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Upbeat economic data contributed to initial strength on Wall Street, although buying interest waned shortly after the start of trading. The major averages have subsequently pulled back well off their early highs, with the Nasdaq and the S&P 500 sliding into negative territory.

Currently, the Dow is holding on to a modest gain, up 8.47 points or less than a tenth of a percent at 26.458.01. The Nasdaq is down 37.77 points or 0.5 percent at 7,958.31 and the S&P 500 is down 6.54 points or 0.2 percent at 2,893.91.

Stocks initially benefited from the upbeat U.S. economic data, including a Commerce Department report showing retail sales rebounded by much more than expected in the month of March.

The Commerce Department said retail sales soared by 1.6 percent in March after edging down by 0.2 percent in February. Economists had expected retail sales to climb by 0.9 percent.

Excluding a jump in sales by motor vehicle and parts dealers, retail sales still surged up by 1.2 percent in March following a revised 0.2 percent dip in February.

Ex-auto sales had been expected to increase by 0.7 percent compared to the 0.4 percent drop originally reported for the previous month.

The report said closely watched core retail sales, which exclude autos, gasoline, building materials and food services, also jumped by 1.0 percent in March after falling by 0.3 percent in February.

"Overall, the retail sales figures add to the slightly more positive tone of the recent data and provide some comfort that the economy isn't falling off a cliff," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "But they don't change our view that the fading of the fiscal boost and the lagged impact of the Fed's monetary tightening will push GDP growth below its 2% potential pace over the coming quarters."

A separate report from the Labor Department showed initial jobless claims unexpectedly edged lower in the week ended April 13th, falling to a nearly 50-year low.

The report said initial jobless claims dipped to 192,000, a decrease of 5,000 from the previous week's revised level of 197,000.

Economists had expected jobless claims to rise to 205,000 from the 196,000 originally reported in the previous week.

With the unexpected decrease, initial jobless claims dropped to their lowest level since hitting 182,000 in September of 1969.

The subsequent pullback by the markets comes as traders digest the latest batch of earnings news, with some traders away from their desks ahead of the long Easter weekend.

Biotechnology stocks are extending the sell-off seen in the previous session, with the NYSE Arca Biotechnology Index tumbling by 2.1 percent to a three-month intraday low.

Pharmaceutical and healthcare stocks are also seeing continued weakness amid concerns about the impact of Democratic healthcare plans even though the implementation of the proposals is seen as a long shot.

Substantial weakness is also visible among tobacco stocks, while oil service stocks are moving higher despite a modest decrease by the price of crude oil.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index slid by 0.8 percent, while China's Shanghai Composite Index fell by 0.4 percent.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.'s FTSE 100 Index has dipped by 0.3 percent, the French CAC 40 Index and the German DAX Index are up by 0.3 percent and 0.4 percent, respectively.

In the bond market, treasuries have moved notably higher despite the upbeat retail sales data. As a result, the yield on benchmark ten-year note, which moves opposite of its price, is down by 3.8 basis points at 2.554 percent.

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