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Lackluster Session Leads To Mixed Close On Wall Street

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Following the rally seen over the course of the previous session, stocks turned in a relatively lackluster performance during trading on Thursday. The Dow and the S&P 500 spent much of the day lingering near the unchanged line before closing modestly lower.

The Dow dipped 80.12 points or 0.3 percent to 27,896.72 and the S&P 500 edged down 6.92 points or 0.2 percent to 3,373.43. Meanwhile, the tech-heavy Nasdaq pulled back off its best levels but still closed up 30.27 points or 0.3 percent at 11,042.50.

The choppy trading on Wall Street came as traders expressed some uncertainty about the outlook for the markets, as the S&P 500 once again failed to surpass the record high it set in February.

The advance by the Nasdaq was partly due to notable gains by tech giants such as Apple (AAPL) and Netflix (NFLX), although many of the big names pulled back off their highs.

Meanwhile, a steep drop by Cisco Systems (CSCO) weighed on the Dow, with the networking giant plunging by 11.2 percent after reporting better than expected fiscal fourth quarter results but providing disappointing guidance.

Traders also kept an eye on developments in Washington, where Democrats and White House officials remain at an impasse over a coronavirus relief bill.

House Speaker Nancy Pelosi, D-Calif., and Treasury Secretary Steven Mnuchin spoke on Wednesday, but both sides came out of the conversation blaming the other for a lack of progress.

President Donald Trump, who has taken unprecedented action to circumvent Congress due to the impasse, claimed "the bill's not going to happen" during a press briefing.

The ongoing stalemate over a new stimulus bill has raised concerns the economic recovery implied by recent data could stall.

Before the start of trading, the Labor Department released a report showing first-time claims for U.S. unemployment benefits declined by much more than anticipated in the week ended August 8th.

The Labor Department said initial jobless claims tumbled to 963,000, a decrease of 228,000 from the previous week's revised level of 1.191 million.

Economists had expected jobless claims to slide to 1.120 million from the 1.186 million originally reported for the previous week.

With the much bigger than expected decrease, jobless claims dropped below 1 million for the first time since the week ended March 14th.

"The drop in claims reflects economic reopening, but it also suggests the expiration of federal supplemental unemployment benefits may have convinced some people to stop collecting and find work," said Chris Low, Chief Economist at FHN Financial.

He added, "Alternatively, people could be falling off rolls because they no longer qualify for assistance in the absence of the emergency expansion of eligibility."

Sector News

Energy stocks moved sharply lower over the course of the session, as the price of crude oil for September fell $0.43 to $42.24 a barrel after the International Energy Agency lowered its 2020 oil demand forecast.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index tumbled by 2.5 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index slumped by 2.1 percent and 2 percent, respectively.

Significant weakness also emerged among computer hardware stocks, as reflected by the 1.9 percent drop by the NYSE Arca Computer Hardware Index.

Banking, airline, tobacco and networking stocks also showed notable moves to the downside over the course of the trading session.

On the other hand, gold stocks moved sharply higher on the day, driving the NYSE Arca Gold Bugs Index up by 3.5 percent.

The rally by gold stocks came as the price of precious metal moved sharply higher as the day progressed, with gold for December delivery jumping $21.40 to $1,970.40 an ounce after hitting a low of $1,923 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index jumped by 1.8 percent, while Australia's S&P/ASX 200 Index slid by 0.7 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1.5 percent, the French CAC 40 Index and the German DAX Index fell by 0.6 percent and 0.5 percent, respectively.

In the bond market, treasuries came under pressure following a disappointing thirty-year bond auction. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.6 basis points to 0.716 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to a slew of U.S. economic data, with traders likely to keep a close eye on reports on retail sales, industrial production and consumer sentiment.

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