Stocks have shown a substantial move to the downside over the course of the trading day on Thursday, as traders react to disappointing economic data. The major averages have all moved sharply lower after seeing some strength in the past few sessions.
While the major averages have moved off their worst levels in recent trading, they continue to post steep losses. The Dow is down 164.69 points or 1.6 percent at 10,250.85, the Nasdaq is down 38.30 points or 1.7 percent at 2,177.40 and the S&P 500 is down 19.81 points or 1.8 percent at 1,074.35.
The weakness in the markets comes as the latest batch of economic data has reignited concerns about the economic outlook, although the below average volume often seen during the dog days of summer may be exacerbating the downward move.
Before the start of trading, the Labor Department added to recent concerns about the outlook for the labor market with the release of a report showing that initial jobless claims unexpectedly jumped to a nine-month high in the week ended August 14th.
The report showed that initial jobless claims rose to 500,000 from the previous week's revised figure of 488,000. Economists had been expecting jobless claims to slip to 475,000 from the 484,000 originally reported for the previous week.
Data from the Philadelphia Federal Reserve added to the selling pressure generated by the weak jobs data, with the Philly Fed saying that its index of regional manufacturing activity unexpectedly dropped into negative territory in August, indicating a contraction.
The Philly Fed Index fell to a negative 7.7 in August from a positive 5.1 in July, with the decrease coming at a substantial shock to economists, who had expected the index to rise to a reading of 7.5.
While a separate report from the Conference Board showed a modest increase in the leading economic indicators index, the increase fell short of economist estimates.
The disappointing economic news has dragged most stocks into the red, although shares of McAfee (MFE) are seeing continued strength after the internet security firm agreed to be acquired by semiconductor giant Intel (INTC) in a deal valued at approximately $7.68 billion.
The deal values McAfee at $48 per share, a 60 percent premium to its closing price on Wednesday. Subsequently, McAfee stock is currently up by 57.4 percent after reaching an eleven-year intraday high earlier in the session.
The acquisition of McAfee along with other recent merger-and-acquisition news may be a signal that corporations are more willing to use their record cash on hand to purchase other companies than to add employees to their existing business.
Sector News
Nearly all of the major sectors are under pressure in early afternoon trading, reflecting the broad based weakness in the markets. Transportation stocks continue to post particularly steep losses, resulting in a 3.3 percent drop by the Dow Jones Transportation Average.
Railroad stocks are among the worst performers in the transportation sector, with the Dow Jones Railroads Index down by 3.2 percent. Among railroad stocks, Kansas City Southern (KSU) is down by 4.3 percent after hitting a nearly three-month intraday low.
Outside of the transportation sector, commercial real estate stocks are posting particularly steep losses, dragging the Morgan Stanley REIT Index down by 2.9 percent. With the loss, the index is on pace for its worst closing level in almost a month.
Significant weakness also remains visible in a variety of other sectors, with housing, defense, oil service, and banking stocks posting standout losses.
Stocks In The News
Shares of Brocade Communications (BRCD) are seeing considerable weakness in early afternoon trading, with the networking equipment maker currently down by 5.5 percent. At its low for the session, Brocade was at its worst intraday level in well over a year.
The loss by Brocade comes after the company reported a third quarter profit versus a year-ago loss but on weaker than expected revenues. The company also forecast fourth quarter earnings below analyst estimates and cuts its full year revenue guidance.
Sears Holdings (SHLD) is also posting a notable loss after the retailer reported a wider than expected adjusted second quarter loss. Shares of Sears are currently down by 7.2 percent, falling to a one-month intraday low.
On the other hand, shares of NetEase.com (NTES) are currently up by 12.8 percent even though the Chinese online game service provider reported second quarter earnings that fell short of analyst estimates. At its high for the session, NetEase was at a five-month intraday high.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region ended the day higher, benefiting from the positive close seen on Wall Street overnight. Japan's benchmark Nikkei 225 Index surged up by 1.3 percent, while Hong Kong's Hang Seng Index rose by 0.2 percent.
Meanwhile, the major European markets showed a notable move to the downside over the course of the day. The French CAC 40 Index fell by 2.1 percent, while the U.K.'s FTSE 100 Index and the German DAX Index closed down by 1.7 percent and 1.8 percent, respectively.
In the bond markets, treasuries are seeing considerable strength amid the sell-off on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is currently down by 6.6 basis points at 2.575 percent.
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