With traders reacting negatively to a disappointing batch of U.S. economic data, stocks have shown a notable downward move over the course of the trading day on Thursday. Lingering concerns about the financial situation in Europe also continue to weigh on the markets.
The major averages have moved roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is down 61.68 points or 0.5 percent at 12,536.87, the Nasdaq is down 31.76 points or 1.1 percent at 2,842.28 and the S&P 500 is down 8.81 points or 0.7 percent at 1,315.99.
The considerable weakness that has emerged on Wall Street is due in large part to the release of a report from the Philadelphia Federal Reserve showing an unexpected contraction in regional manufacturing activity in the month of May.
The Philly Fed said its diffusion index of current activity tumbled to a negative 5.8 in May from a positive 8.5 in April, with a negative reading indicating a contraction in regional manufacturing activity. The drop surprised economists, who had expected the index to climb to a reading of 10.0.
Adding to the negative sentiment, a separate report from the Conference Board showed an unexpected drop by its leading economic indicators index.
The leading economic index edged down by 0.1 percent in April following a 0.3 percent increase in March, while economists had expected the index to inch up by 0.1 percent.
Before the start of trading, the Labor Department released a report showing that initial jobless claims unexpectedly came in unchanged in the week ended May 12th.
The report said jobless claims came in at 370,000, unchanged from the previous week's revised figure. Economists had expected jobless claims to edge down to 365,000 from the 367,000 originally reported for the previous week.
The negative reaction to the data reflects the recent downward trend by stocks, as traders largely shrugged off some upbeat data earlier in the week.
Meanwhile, Wal-Mart (WMT) is bucking the downtrend by the broader markets after the retail giant reported better than expected first quarter results. The company also forecast second quarter earnings in line with analyst estimates. Shares of Wal-Mart are up by 5.3 percent.
Sector News
Housing stocks have shown a substantial move to the downside over the course of the trading day, dragging the Philadelphia Housing Sector Index down by 3.5 percent. With the loss, the index has fallen to its worst intraday level in almost a month.
Standard Pacific (SPF) and KB Home (KBH) are turning in two of the housing sector's worst performances, falling by 7.9 percent and 6.6 percent, respectively.
Considerable weakness has also emerged among biotechnology stocks, as reflected by the 2.5 percent loss being posted by the NYSE Arca Biotechnology Index. Dendreon (DNDN) is leading the sector lower amid news that the SEC has launched a formal investigation of the company.
Transportation, commercial real estate, electronic storage, and chemical stocks have also come under significant selling pressure, moving lower along with most of the major sectors.
On the other hand, gold stocks have moved sharply higher on the day, driving the NYSE Arca Gold Bugs Index up by 5.9 percent. The strength in the sector comes as the price of gold for June delivery is surging up $40.10 to $1,576.70 an ounce.
Other Markets
In overseas trading, stock markets across the Asia-Pacific turned in yet another mixed performance on Thursday. While Japan's Nikkei 225 Index rose by 0.9 percent on upbeat Japanese GDP data, Hong Kong's Hang Seng Index slipped 0.3 percent.
Meanwhile, the major European markets all showed notable moves to the downside on the day. The U.K.'s FTSE 100 Index, the French CAC 40 Index, and the German DAX Index all ended the day down by 1.2 percent.
In the bond market, treasuries have moved higher on the heels of the disappointing economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.6 basis points at 1.729 percent.
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