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Major Averages Turning In Mixed Performance In Early Afternoon Trading

wallstreet oct22 19nov20 lt

Stocks are turning in a mixed performance in early afternoon trading on Thursday following the sell-off seen late in the previous session. While the Nasdaq has moved to the upside on the day, the Dow and the S&P 500 are pulling back further off Monday's record closing highs.

Currently, the major averages remain on opposite sides of the unchanged line. The Nasdaq is up 34.97 points or 0.3 percent at 11,836.57, but the Dow is down 136.25 points or 0.5 percent at 29,302.17 and the S&P 500 is down 9.82 points or 0.3 percent at 3,557.97.

Traders seem reluctant to make more significant moves as they weigh optimism about a potential coronavirus vaccine against the recent spike in cases.

Data from John Hopkins University showed 170,161 new coronavirus cases in the U.S. on Wednesday, the second-highest daily total, while daily deaths reached a new high of 1,848.

The recent surge in coronavirus cases has led several states to impose new restrictions and lockdowns, raising concerns about an economic downturn.

However, recent upbeat news about vaccine candidates has led to optimism that any pullback by the economy due to stricter restrictions will be relatively brief.

Results published in the Lancet medical journal showed a vaccine being developed by the University of Oxford and AstraZeneca (AZN) is safe and triggers a similar immune response in older people as it does in younger people.

The latest news comes following upbeat efficacy results for vaccines being developed by Moderna (MRNA) and Pfizer (PFE) and BioNTech (BNTX).

Traders are also digesting a mixed batch of U.S. economic data, as separate reports showed an unexpected increase in initial jobless claims and an unexpected spike in existing home sales.

A report from the Labor Department said jobless claims climbed to 742,000 in the week ended November 14th, an increase of 31,000 from the previous week's revised level of 711,000.

The rebound came as a surprise to economists, who had expected jobless claims to edge down to 707,000 from the 709,000 originally reported for the previous week.

In the previous week, jobless claims fell to their lowest level since hitting 282,000 in the week ended March 14th.

"The risk may be for a further rise in claims as coronavirus cases surge and some states impose restrictions on activity," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

Meanwhile, a separate report from the National Association of Realtors said existing home sales jumped by 4.3 percent to an annual rate of 6.85 million in October after soaring by 9.9 percent to a revised rate of 6.57 million in September.

The sharp increase came as a surprise to economists, who had expected existing home sales to slump by 1.4 percent to a rate of 6.45 million from the 6.54 million originally reported for the previous month.

With the unexpected spike, existing home sales reached their highest level since February of 2006. Existing home sales were up by 26.6 percent compared to the same month a year ago.

"Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year," said Lawrence Yun, NAR's chief economist.

Sector News

Most of the major sectors continue to show only modest moves on the day, contributing to the lackluster performance by the broader markets.

Tobacco stocks have shown a substantial move to the downside, however, with the NYSE Arca Tobacco Index tumbling by 1.8 percent. The index is pulling back further off the nearly ten-month intraday high set on Wednesday.

Significant weakness also remains visible among utilities stocks, as reflected by the 1.6 percent drop by the Dow Jones Utilities Average.

Transportation and gold stocks are also seeing some weakness in afternoon trading, while software stocks have moved notably higher on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Thursday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index rose by 0.5 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index slumped by 0.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index slid by 0.8 percent and 0.7 percent, respectively.

In the bond market, treasuries have moved higher following the slight drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.5 basis points at 0.847 percent.

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