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U.S. Stocks May See Further Downside In Early Trading

wallstreet oct22 19jan23 lt

After moving sharply lower over the course of the previous session, stocks are likely to see further downside in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.8 percent.

Concerns about the economic outlook may continue to weigh on the markets following yesterday's disappointing retail sales and industrial production data.

Traders also remain concerned about the outlook for interest rates amid worries the Federal Reserve will continue aggressively raising rates despite signs of a slowdown in inflation.

On the economic front, a report released by the Labor Department unexpectedly showed a decrease in first-time claims for U.S. unemployment benefits in the week ended January 14th.

The Labor Department said initial jobless claims fell to 190,000, a decrease of 15,000 from the previous week's unrevised level of 205,000. The dip surprised economists, who had expected jobless claims to rise to 214,000.

The Commerce Department also released a report showing new residential construction in U.S. fell for the fourth straight month in December, although the decrease was much smaller than expected.

The report said housing starts slumped by 1.4 percent to an annual rate of 1.382 million in December after tumbling by 1.8 percent to a revised rate of 1.401 million in November.

Economists had expected housing starts to plunge by 4.8 percent to an annual rate of 1.359 million from the 1.427 million originally reported for the previous month.

The Commerce Department said building permits also dove by 1.6 percent to an annual rate of 1.330 million in December after plummeting by 10.6 percent to a revised rate of 1.351 million in December.

Building permits, an indicator of future housing demand, were expected to jump by 2.1 percent to an annual rate of 1.370 million from the 1.342 million originally reported for the previous month.

The Federal Reserve Bank of Philadelphia also released a report showing regional manufacturing activity has contracted at a slower rate in the month of January.

The Philly Fed said its diffusion index for current activity climbed to a negative 8.9 in January from a negative 13.7 in December, although a negative reading still indicates a contraction. Economists had expected the index to inch up to a negative 11.0.

Stocks saw initial strength during trading on Wednesday but moved sharply lower over the course of the session. The major averages all showed notable moves to the downside after ending Tuesday's trading mixed.

The major averages fell to new lows for the session going into the close of trading. The Dow plunged 613.89 points or 01.8 percent to 33,296.96, the Nasdaq slumped 138.10 points or 1.2 percent to 10,957.01 and the S&P 500 tumbled 62.11 points or 1.6 percent to 3,928.86.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index dove by 1.4 percent, while China's Shanghai Composite Index rose by 0.5 percent.

Meanwhile, the major European markets have all shown notable moves to the downside on the day. While the U.K.'s FTSE 100 Index has slumped by 1.2 percent, the German DAX Index is down by 1.7 percent and the French CAC 40 Index is down by 1.9 percent.

In commodities trading, crude oil futures are edging down $0.08 to $79.40 a barrel after falling $0.70 to $79.48 barrel on Wednesday. Meanwhile, after slipping $2.90 to $1,907 an ounce in the previous session, gold futures are inching up $5.50 to $1,912.50 an ounce.

On the currency front, the U.S. dollar is trading at 128.53 yen versus the 128.90 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0803 compared to yesterday's $1.0794.

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