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U.S. Stocks Stage Significant Recovery Attempt After Early Weakness

wallstreet oct25 17nov22 lt

Stocks moved sharply lower in early trading on Thursday but have shown a substantial recovery attempt over the course of the session. The major averages have climbed well off their worst levels of the day, with the Dow and the Nasdaq testing positive territory.

Currently, the major averages are turning in a mixed performance. While the Dow is up 28.83 points or 0.1 percent at 33,582.66, the Nasdaq is down 14.51 points or 0.1 percent at 11,169.15 and the S&P 500 is down 10.00 points or 0.3 percent at 3,948.79.

The early weakness on Wall Street came as the latest developments offset recent optimism about easing Chinese Covid restrictions and the outlook for interest rates.

A recent jump in Covid cases in China has dashed hopes that the country will soon begin easing restrictions, leading to renewed concerns about global demand.

Hawkish comments from Federal Reserve officials also dented recent optimism about the outlook for interest rates.

In remarks at an event hosted by Greater Louisville Inc., St. Louis Fed President James Bullard suggested the central bank's aggressive interest rate hikes have had "only limited effects on observed inflation."

Bullard said the Fed will need to continue increasing interest rates to reach a level that could be considered "sufficiently restrictive."

Selling pressure has waned over the course of the session, inspiring some traders to pick up stocks at relatively reduced levels.

Sector News

Despite the recovery attempt by the broader markets, housing stocks continue to see significant weakness, resulting in a 2.0 percent slump by the Philadelphia Housing Sector Index.

The weakness among housing stocks comes following the release of a Commerce Department showing a notable decrease in housing starts in the month of October.

Considerable weakness also remains visible among gold stocks, as reflected by the 1.9 percent loss being posted by the NYSE Arca Gold Bugs Index.

Gold stocks have moved lower along with the price of the precious metal, with gold for December delivery falling $13.10 to $1,762.70 an ounce.

Transportation, utilities and banking stocks also continue to see notable weakness but have climbed well off their worst levels of the day.

Meanwhile, semiconductor stocks have shown a substantial turnaround over the course of the session, with the Philadelphia Semiconductor Index climbing by 1.0 percent after falling as much as 2.1 percent in early trading.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index slumped by 1.2 percent.

Meanwhile, the major European markets turned mixed over the course of the session. While the German DAX Index inched up by 0.2 percent, the U.K.'s FTSE 100 Index edged down by 0.1 percent and the French CAC 40 Index slid by 0.5 percent.

In the bond market, treasuries have shown a notable pullback after moving sharply higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 9.2 basis points at 3.784 percent.

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