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Stocks Move Modestly Lower After Seeing Early Strength - U.S. Commentary


After failing to sustain an early move to the upside, stocks have turned lower over the course of the trading session on Thursday. The major averages have pulled back off their highs of the session and into negative territory.

Currently, the major averages are posting modest losses on the day. The Dow is down 12.51 points or 0.1 percent at 25,613.08, the Nasdaq is down 9.36 points 0.1 percent at 7,634.01 and the S&P 500 is down 2.91 points or 0.1 percent at 2,802.46.

Stocks initially benefited from an increase by bond yields, which rebounded from recent weakness following reports of progress in U.S.-China trade talks.

A senior U.S. administration official told Reuters that U.S. and Chinese negotiators have made progress on the details of the written agreements to address U.S. concerns.

"If you looked at the texts a month ago compared to today, we have moved forward in all areas," the official said but noted, "We aren't yet where we want to be."

The report comes as U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrive in Beijing for a new round of high-level talks with Chinese officials.

Buying interest waned shortly after the start of trading, however, as traders digest a report from the Commerce Department showing U.S. economic growth slowed by more than previously estimated in the fourth quarter.

The Commerce Department said GDP climbed by 2.2 percent in the fourth quarter compared to the previously reported 2.6 percent increase. Economists had expected the pace of growth to be downwardly revised to 2.4 percent.

With the downward revision, the pace of GDP growth in the fourth quarter is notably slower than the 3.4 percent jump in the third quarter.

The National Association of Realtors also released a report showing an unexpected pullback in pending home sales in the month of February.

NAR said its pending home sales index slumped by 1.0 percent to 101.9 in February after soaring by 4.3 percent to 102.9 in January. Economists had expected pending home sales to climb by 0.7 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Meanwhile, a separate report from the Labor Department showed an unexpected decrease in first-time claims for U.S. unemployment benefits in the week ended March 23rd.

The report said initial jobless claims dipped to 211,000, a decrease of 5,000 from the previous week's revised level of 216,000.

The drop came as a surprise to economists, who had expected jobless claims to rise to 225,000 from the 221,000 originally reported for the previous week.

Sector News

Gold stocks have moved sharply lower over the course of the trading session, dragging the NYSE Arca Gold Bugs Index down by 3.2 percent. The index is pulling back further off the eight-month closing high it set on Tuesday.

The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, with gold for April delivery plunging $20.30 to $1,290.10 an ounce.

Considerable weakness has also emerged among utilities stocks, as reflected by the 1.3 percent drop by the Dow Jones Utility Average. The average continues to give back ground after reaching a record closing high on Tuesday.

Telecom stocks have also moved to the downside on the day, while some strength remains visible among tobacco and chemical stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Thursday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.'s FTSE 100 Index has advanced by 0.7 percent, the German DAX Index is up by 0.1 percent and the French CAC 40 Index is nearly unchanged.

In the bond market, treasuries are giving back ground after trending higher over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.1 basis points at 2.395 percent.

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