U.S. Stocks Finish Disappointing Month On Sour Note

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Following the mixed performance seen in the previous session, stocks moved sharply lower over the course of the trading session on Thursday. The Dow tumbled to a three-month closing low, while the Nasdaq and the S&P 500 both ended the day at their lowest closing levels in over two months.

The Dow plunged 546.80 points or 1.6 percent to 33,843.92 and the S&P 500 slumped 51.92 points or 1.2 percent to 4,307.54, while the Nasdaq spent the day bouncing back and forth across the unchanged line before closing down 63.86 points or 0.4 percent at 14,448.58.

The weakness that emerged on Wall Street came on the final day of what was already a particularly disappointing month for stocks.

For the month of September, the Dow dove by 4.3 percent, while the Nasdaq and the S&P 500 plummeted by 5.3 percent and 4.8 percent, respectively. The S&P 500 saw its worst month since the early days of the coronavirus pandemic.

Concerns about the outlook for inflation continued to weigh on the markets along with indications the Federal Reserve plans to begin scaling back its asset purchases in the near future.

Traders largely shrugged off news that lawmakers in Washington avoided a government shutdown, with the Senate and the House both passing a stopgap spending bill.

The legislation, which funds the government through December 3rd, also includes spending on hurricane relief and Afghan refugee resettlement.

While a government shutdown was avoided, the U.S. still faces a potential default amid an impasse over raising the debt ceiling.

Treasury Secretary Janet Yellen has warned of "catastrophic economic consequences" if the debt ceiling is not raised by October 18th.

Yellen and Federal Reserve Chair Jerome Powell also testified before the House Financial Services Committee today.

Powell's prepared remarks mirrored those he delivered before the Senate Banking Committee on Tuesday, with the Fed chief warning of upside risks to inflation.

On the economic front, a report from the Labor Department showed initial jobless claims unexpectedly increased for the third straight week in the week ended September 25th.

The report said initial jobless claims edged up to 362,000, an increase of 11,000 from the previous week's unrevised level of 351,000. The uptick surprised economists, who had expected jobless claims to dip to 335,000.

With the unexpected increase, jobless claims climbed further off the pandemic-era low of 312,000 set in the week ended September 4th.

Sector News

Housing stocks moved sharply lower over the course of the session, dragging the Philadelphia Housing Sector Index down by 2.6 percent to a nearly six-month closing low.

Substantial weakness was also visible among airline stocks, as reflected by the 2.3 percent nosedive by the NYSE Arca Airline Index.

Tobacco stocks also saw considerable weakness on the day, with the NYSE Arca Tobacco Index tumbling by 2 percent.

Altria (MO) and Philip Morris (PM) posted steep losses after the International Trade Commission ruled the tobacco producers must halt imports and sales of their IQOS heated tobacco device in a patent case brought by rival R.J. Reynolds.

Financial, chemical, commercial real estate and retail stocks also showed notable moves to the downside, while gold stocks bucked the downtrend amid a spike by the price of the precious metal.

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 fell by 0.3 percent, while China's Shanghai Composite Index advanced by 0.9 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index dipped by 0.3 percent, the French CAC 40 Index and the German DAX Index slid by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries moved modestly higher over the course of the session after initially showing a lack of direction. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.2 basis points to 1.529 percent.

Looking Ahead

A batch of U.S. economic data may attract attention on Friday, with traders likely to keep an eye on reports on personal income and spending, manufacturing activity, construction spending and consumer sentiment.

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