U.S. Stocks Finish Volatile Session Modestly Lower

wallstreet oct17 13feb20

After coming under pressure early in the session, stocks fluctuated over the course of the trading day on Thursday. The Nasdaq and the S&P 500 recovered from the early weakness to reach new record intraday highs but eventually returned to negative territory.

The major averages all finished the session in the red. The Dow fell 128.11 points or 0.4 percent to 29,423.31, the Nasdaq edged down 13.99 points or 0.1 percent to 9,711.97 and the S&P 500 dipped 5.51 points or 0.2 percent to 3,373.94.

Profit taking contributed to initial weakness on Wall Street, as some traders looked to cash in on recent gains amid news of a jump in new coronavirus cases.

Officials revealed an additional 242 deaths from the coronavirus in the Chinese province of Hubei as well as 14,840 new confirmed cases.

While the jump in confirmed cases was partly due to the adoption of new methodology for counting infections, the spike still led to renewed fears about the outbreak.

However, traders have recently been able to shrug off concerns about the coronavirus amid optimism that the outbreak will eventually be contained.

The early weakness on Wall Street was subsequently seen as another buying opportunity for some traders even as a number of companies continue to warn about the impact of the outbreak.

On the U.S. economic front, the Labor Department released a report showing a modest increase in consumer prices in the month of January.

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

Core consumer prices, which exclude food and energy prices, rose by 0.2 percent in January after ticking up by 0.1 percent in the previous month. The increase in core prices matched economist estimates.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits inched up by less than expected in the week ended February 8th.

The report said initial jobless claims crept up to 205,000, an increase of 2,000 from the previous week's revised level of 203,000.

Economists had expected jobless claims to rise to 210,000 from the 202,000 originally reported for the previous week.

Sector News

Despite the volatility shown by the broader markets, computer hardware stocks saw significant weakness throughout the session. Reflecting the weakness in the sector, the NYSE Arca Computer Hardware Index tumbled by

NetApp (NTAP) led the sector lower, plunging by 9.3 percent after the data storage company reported fiscal third quarter results that missed analyst estimates and announced the retirement of its CFO.

Pharmaceutical, oil service and telecom stocks also showed notable moves to the downside on the day, contributing to the lower close by the broader markets.

On the other hand, gold stocks showed a strong move to the upside, driving the NYSE Arca Gold Bugs Index up by 1.2 percent.

The strength among gold stocks comes amid an increase by the price of the precious metal, with gold for April delivery climbing $7.20 to $1,578.80 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index edged down by 0.1 percent, while China's Shanghai Composite Index slid by 0.7 percent.

The major European markets also ended the day lower but well off their worst levels. While the U.K.'s FTSE 100 Index slumped by 1.1 percent, the French CAC 40 Index dipped by 0.2 percent and the German DAX Index closed just below the unchanged line.

In the bond market, treasuries moved modestly higher following the pullback seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 1.617 percent.

Looking Ahead

Traders have not paid much attention to U.S. economic data recently but are likely to keep an eye on Friday's reports on retail sales, industrial production and consumer sentiment.

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