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Stocks Turn Lower As Early Buying Interest Fades - U.S. Commentary

Wallstreet 013013 09Jan14

Stocks have moved mostly lower over the course of the trading day on Thursday after failing to sustain an initial upward move. Expectations of further tapering by the Federal Reserve seem to be weighing on the markets following recent upbeat economic data.

The major averages have recently climbed off their worst levels of the day but remain in the red. The Dow is down 42.64 points or 0.3 percent at 16,420.10, the Nasdaq is down 15.46 points or 0.4 percent at 4,150.15 and the S&P 500 is down 3.42 points or 0.2 percent at 1,834.07.

The initial strength on Wall Street came on the heels of the release of a report from the Labor Department showing that initial jobless claims fell by more than expected in the week ended January 4th.

The report said jobless claims dropped to 330,000 from the previous week's revised figure of 345,000, while economists had expected jobless claims to fall to 335,000.

Buying interest waned not long after the open, however, as traders looked ahead to the release of the more closely watched monthly jobs report on Friday.

The jobless claims data combined with yesterday's better than expected private sector jobs report has led some to believe that the monthly report could show an increase in jobs in excess of the 200,000 expected by economists.

While strong job growth would be a positive for the economic outlook, it would also further solidify expectations that the Fed will continue to scale back its asset purchase program in the coming months.

The minutes of the Fed's December meeting led several economists to reiterate predictions that the central bank will continue to will taper by $10 billion per meeting until the program ends.

Among individual stocks, shares of Bed Bath & Beyond (BBBY) have moved sharply lower after the retailer reported weaker than excepted third quarter earnings and cuts its outlook.

Pier 1 Imports (PIR) has also come under pressure after reporting December comparable store sales growth that came in well below expectations.

On the other hand, shares of Macy's (M) are moving notably higher after the department store operator provided upbeat guidance for 2014 and announced plans to cut 2,500 jobs as part of a reorganization.

Sector News

Networking stocks have shown a notable move to the downside over the course of the trading day, dragging the NYSE Arca Networking Index down by 1.7 percent. With the loss, the index is giving back ground after ending Wednesday's trading at its best closing level in well over two years.

Adtran (ADTN) and Alcatel-Lucent (ALU) are turning in two of the networking sector's worst performances, falling by 5.2 percent and 5 percent, respectively.

Considerable weakness has also emerged among steel stocks, as reflected by the 1.3 percent loss being posted by the NYSE Arca Steel Index. The loss extends a recent downward trend by the index, which has pulled back well off the eleven-month closing high set on New Year's Eve.

Electronic storage, gold, and telecom stocks have also come under pressure on the day, while some strength remains visible among airline and biotech stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index tumbled by 1.5 percent, while Hong Kong's Hang Seng Index dropped by 0.9 percent.

The major European markets also came under pressure over the course of the session. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the French CAC 40 Index and the German DAX Index both ended the day down by 0.8 percent.

In the bond market, treasuries have pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.997 percent.

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