Stocks Climb Off Worst Levels But Remain Firmly Negative - U.S. Commentary

(RTTNews) - After falling sharply early in the session, stocks have regained some ground over the course of the trading day on Thursday. The Dow and the S&P 500 have climbed well off the three-month intraday lows set in early trading.

Currently, the major averages remain firmly in negative territory. The Dow is down 118.85 points or 0.7 percent at 18,025.35, the Nasdaq is down 37.11 points or 0.7 percent at 5,201.91 and the S&P 500 is down 13.56 points or 0.6 percent at 2,125.62.

Concerns about the outlook for global economic growth contributed to the early weakness on Wall Street following the release of disappointing Chinese trade data.

A report out of China showed that exports fell 10 year-over-year in September compared to expectations for a decrease of about 3 percent. Imports also fell by 1.9 percent, belying expectations for a 0.9 percent increase.

The Chinese trade surplus subsequently narrowed to $42 billion, smaller than the $53 billion surplus forecast by economists.

Julian Evans-Pritchard, China Economist at Capital Economics, said, "Overall, today's data are a reminder that China faces a challenging external environment which is likely to keep export growth subdued in coming quarters."

"Separately, the drop in imports could be an early sign that the recent recovery in economic activity is losing momentum," he added. "Nonetheless, we would caution against reading too much into a single data point given the volatility of the trade figures."

Traders also continue to express concerns about a near-term interest rate hike by the Federal Reserve after a report from the Labor Department showed initial jobless claims at their lowest level in over forty years.

The Labor Department said initial jobless claims came in at 246,000 in the week ended October 8th, unchanged from the previous week's revised level. Economists had expected jobless claims to climb to 254,000.

With the downward revision to the figure for the previous week, jobless claims held at their lowest levels since November of 1973.

Sector News

Steel stocks continue to see substantial weakness in mid-day trading amid concerns about the outlook for global demand. Reflecting the weakness in the steel sector, the NYSE Arca Steel Index has slumped by 3.3 percent.

U.S. Steel (X), Olympic Steel (ZEUS), and AK Steel (AKS) are turning in some of the steel sector's worst performances.

Considerable weakness also remains visible among financial stocks, with the Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index tumbling by 2.3 percent and 2 percent, respectively.

Semiconductor stocks are also extending the decline seen over the past few sessions, dragging the Philadelphia Semiconductor Index down by 1.8 percent. The index is pulling back further off the sixteen-year closing high set a week ago.

Networking, computer hardware, and chemical stocks are also seeing notable weakness in mid-day trading, while some strength has emerged among utilities and airline 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 fell by 0.4 percent, while Hong Kong's Hang Seng Index tumbled by 1.6 percent.

The major European markets also came under pressure on the day. While the U.K.'s FTSE 100 Index slid by 1 percent, the German DAX Index and the French CAC 40 Index slumped by 1 percent and 1.1 percent, respectively.

In the bond market, treasuries are regaining some ground after trending lower over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.5 basis points at 1.743 percent.