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U.S. Stocks Finish Extremely Volatile Session Little Changed

wallstreet aug20 12may22 lt

Stocks saw substantial volatility over the course of the trading day on Thursday before ending the day little changed. After showing wild swings as the day progressed, the major averages closed narrowly mixed.

The major averages showed a notable recovery going into the close, with the tech-heavy Nasdaq inching up 6.73 points or 0.1 percent to 11,370.96. Meanwhile, the S&P 500 edged down 5.10 points or 0.1 percent to 3,930.08 and the narrower Dow dipped 103.81 points or 0.3 percent at 31,730.30.

The volatility on Wall Street came as traders continued to debate whether the markets have hit their bottom, with the major averages falling to their worst levels in over a year.

However, recent bargain hunting efforts have largely been thwarted by worries about the Federal Reserve aggressively raising interest rates in an effort to combat elevated inflation.

Traders have recently expressed concerns more aggressive moves by the Fed and other central banks could lead to a period of stagflation or an outright recession.

Adding to the worries, the Labor Department released a report this morning showing the annual rate of producer price growth slowed by less than expected in the month of April.

The report showed the annual rate of growth in producer prices slowed to 11.0 percent in April from a record high 11.5 percent in March, although economists had expected a bigger slowdown to 10.7 percent.

Core producer prices, which exclude prices for food, energy and trade services, were up by 6.9 percent compared to a year ago, reflecting a modest slowdown from the 7.1 percent spike seen in the previous month.

A separate report released by the Labor Department unexpectedly showed a slight increase in first-time claims for U.S. unemployment benefits in the week ended May 7th.

The Labor Department said initial jobless claims crept up to 203,000, an increase of 1,000 from the previous week's revised level of 202,000.

The uptick surprised economists, who had expected jobless claims to dip to 195,000 from the 200,000 originally reported for the previous week.

Sector News

Gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 4.4 percent to its lowest closing level in well over three months.

The sell-off by gold stocks came amid a sharp drop by the price of the precious metal, with gold for June delivery tumbling $29.10 to $1,824.60 an ounce.

Significant weakness was also visible among airline stocks, as reflected by the 1.8 percent drop by the NYSE Arca Airline Index, which fell to a two-month closing low.

On the other hand, housing stocks moved sharply higher on the day, driving the Philadelphia Housing Sector Index up by 3.4 percent. The index rebounded after ending the previous session at its lowest closing level in over a year.

Biotechnology stocks also regained considerable ground, with the NYSE Arca Biotechnology Index jumping by 2.2 percent after ending the previous session at a more than one-year closing low.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Thursday. Japan's Nikkei 225 Index dove by 1.8 percent, while Hong Kong's Hang Seng Index plummeted by 2.2 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 tumbled by 1.6 percent, the French CAC 40 Index slumped by 1 percent and the German DAX Index fell by 0.6 percent.

In the bond market, treasuries extended the upward move seen over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 10.4 basis points to 2.817 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to reports on import and exports prices and consumer sentiment.

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