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U.S. Stocks Move Mostly Lower In Reaction To Earnings News


After revering from initial weakness, stocks have moved back to the downside over the course of the trading session on Thursday. With the drop, the major averages continued to pull back off Monday's record closing highs.

The major averages have climbed off their worst levels in recent trading but remain firmly negative. The Dow is down 112.79 points or 0.4 percent at 27,107.06, the Nasdaq is down 42.70 points or 0.5 percent at 8,142.51 and the S&P 500 is down 7.62 points or 0.3 percent at 2,976.80.

The weakness on Wall Street partly reflects a negative reaction to the latest earnings news, with shares of Netflix (NFLX) showing a particularly steep drop.

Netflix is currently down by 11 percent after the video streaming giant reported better than expected second quarter earnings but weaker than expected international subscriber growth.

Health insurer UnitedHealth (UNH) has also come under pressure despite reporting better than expected second quarter results and raising its full-year guidance.

On the other hand, shares of giant eBay (EBAY) have shown a strong move to the upside after the eCommerce giant reported second quarter results that beat expectations and raised its profit forecast.

Tech giant IBM Corp. (IBM) is also posting a notable gain after reporting second quarter earnings that beat analyst estimates but a continued decline in revenues.

Overall trading activity is somewhat subdued, however, as traders stick to the sidelines ahead of the release of quarterly results from software giant Microsoft (MSFT) after the close of today's trading.

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits increased in line with economist estimates in the week ended July 13th.

The report said initial jobless claims inched up to 216,000, an increase of 8,000 from the previous week's revised level of 208,000.

Economists had expected jobless claims to creep up to 216,000 from the 209,000 originally reported for the previous week.

A separate report from the Philadelphia Federal Reserve showed its reading on regional manufacturing activity jumped much more than expected in the month of July.

The Philly Fed said its diffusion index for current general activity surged up to 21.8 in July after tumbling to 0.3 in June, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to rise to 5.0.

Meanwhile, the Conference Board released a report showing an unexpected decrease by its index of leading U.S. economic indicators in the month of June.

The Conference Board said its leading economic index fell by 0.3 percent in June after coming in unchanged in May. The drop surprised economists, who had expected the index to inch up by 0.1 percent.

"As the US economy enters its eleventh year of expansion, the longest in US history, the LEI suggests growth is likely to remain slow in the second half of the year," said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board.

Sector News

Retail stocks continue to see considerable weakness in mid-day trading, dragging the Dow Jones U.S. Retail Index down by 1.9 percent. The index is pulling back further off the record closing high set on Monday.

Significant weakness has also emerged among oil service stocks, as reflected by the 1.3 percent loss being posted by the Philadelphia Oil Service Index.

The weakness in the oil service sector comes amid a steep drop by the price of crude oil, with crude for August delivery plunging $1.81 to $54.97 a barrel.

Telecom and natural gas stocks are also seeing notable weakness on the day, while tobacco and gold stocks have shown strong moves to the upside.

Philip Morris (PM) is leading the tobacco sector higher after reporting better than expected second quarter results and raising its full-year guidance.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Thursday. Japan's Nikkei 225 Index plunged by 2 percent, while China's Shanghai Composite Index slumped by 1 percent.

The major European markets also moved to the downside on the day. While the German DAX Index slid by 0.9 percent, the U.K.'s FTSE 100 Index dropped by 0.6 percent and the French CAC 40 Index fell by 0.4 percent.

In the bond market, treasuries are showing a lack of direction following the notable advance seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.066 percent.

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