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U.S. Stocks Close Mostly Lower But Dow Posts Modest Gain

wallstreet july26 15jul21 lt

Following the lackluster performance seen in the previous session, stocks moved mostly lower during trading on Thursday. The Nasdaq and the S&P 500 closed in negative territory, although the narrower Dow managed to close modestly higher.

While the Dow rose 53.79 points or 0.2 percent to 34,987.02, the tech-heavy Nasdaq slid 101.82 points or 0.7 percent to 14,543.13 and the S&P 500 fell 14.27 points or 0.3 percent to 4,360.03.

The uptick by the Dow was partly due to an advance by shares of UnitedHealth (UNH), which closed higher after the health insurer reported better than expected second quarter results. Honeywell (HON) and Home Depot (HD) also posted notable gains.

Meanwhile, the weakness in the broader markets partly reflected renewed concerns about the global economic outlook after a report from China's National Bureau of Statistics showed Chinese GDP growth slowed by more than expected in the second quarter.

The report showed Chinese GDP grew 7.9 percent year-on-year in the second quarter, shy of expectations for a gain of 8.1 percent and down sharply from 18.3 percent in the three months prior.

Indications some central banks around the world are considering tightening monetary policy much sooner than the Federal Reserve may have added to worries about the global economy.

Traders were also digesting a slew of U.S. economic data, including a report from the Federal Reserve showing industrial production increased by less than expected in the month of June.

The Fed said industrial production rose by 0.4 percent in June after climbing by a downwardly revised 0.7 percent in May. Economists had expected industrial production to increase by 0.7 percent.

The weaker than expected growth was partly due to a 0.1 percent dip in manufacturing output, which came as an ongoing shortage of semiconductors contributed to a 6.6 percent nosedive in the production of motor vehicles and parts.

The Labor Department also released a report showing first-time claims for unemployment benefits decreased in line with economist estimates in the week ended July 10th.

The report said initial jobless claims fell to 360,000, a decrease of 26,000 from the previous week's revised level of 386,000.

Economists had expected jobless claims to dip to 360,000 from the 373,000 originally reported for the previous week.

With the decrease, initial jobless claims once again fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

A separate report released by the Labor Department showed U.S. import prices increased in line with economist estimates in the month of June.

Meanwhile, separate reports from the New York Federal Reserve and the Philadelphia Federal Reserve showed mixed readings on the pace of growth in manufacturing activity in the two regions.

Sector News

Oil service stocks showed a substantial move to the downside on the day, dragging the Philadelphia Oil Service Index down by 3.6 percent to its lowest closing level in over two months.

The sell-off by oil service stocks came amid a continued decrease by the price of crude oil, with crude for August delivery $1.48 to $71.65 a barrel.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.2 percent slump by the Philadelphia Semiconductor Index. The index pulled back further off the record intraday high set in early trading on Wednesday.

Oil producer, networking and computer hardware stocks also saw notable weakness on the day, while utilities stocks showed a strong move to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index tumbled by 1.2 percent, while China's Shanghai Composite Index jumped by 1 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1.1 percent, the German DAX Index and the French CAC 40 Index both closed down by 1 percent.

In the bond market, treasuries fluctuated over the course of the session before closing firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.9 basis points to 1.297 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to another batch of U.S. economic data, including reports on retail sales and consumer sentiment.

On the earnings front, Alcoa (AA) and American Outdoor Brands (AOUT) are among the companies reporting their quarterly results after the close of today's trading.

Charles Schwab (SCHW), Ericsson (ERIC), Kansas City Southern (KSU) and State Street (STT) are also among the companies due to report their results before the start of trading on Friday.

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