Stocks Close Modestly Lower As Traders Digest Fed Statement - U.S. Commentary

(RTTNews) - Following the rally seen going into the close of the previous session, stocks gave back some ground during trading on Thursday. Selling pressure remained relatively subdued, however, limiting the downside for the markets.

While the Dow and the S&P 500 briefly peeked above the unchanged line in late trading, the major averages all closed in the red.

The Dow dipped 23.72 points or 0.1 percent to 17,755.80, the Nasdaq fell 21.42 points or 0.4 percent to 5,074.27 and the S&P 500 edged down 0.94 points or less than a tenth of a percent to 2,089.41.

The modest weakness on Wall Street came as traders continued to digest yesterday's monetary policy announcement from the Federal Reserve, which suggested a December interest rate hike remains on the table.

Many analysts pointed to the fact that the Fed statement removed a reference to global economic and financial developments potentially restraining economic activity.

The Fed's explicit indication that it will assess progress towards its objectives in determining whether it will be appropriate to raise rate at its "next meeting" was also highlighted.

Profit taking also contributed to the pullback by stocks after Wednesday's late-day rally lifted the Dow to a three-month closing high.

On the U.S. economic front, the Commerce Department released a report before the start of trading showing a notable slowdown in the pace of U.S. economic growth in the third quarter.

The report said real gross domestic product rose by 1.5 percent in the third quarter compared to the 3.9 percent jump seen in the second quarter. Economists had expected a 1.7 percent increase.

The Commerce Department said the slower growth reflected a downturn in private inventory investment as well as decelerations in exports, non-residential fixed investment, and consumer spending.

Meanwhile, the National Association of Realtors released a separate report showing that pending home sales unexpectedly fell for the second straight month in September.

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.

Sector News

Gold stocks moved sharply lower over the course of the trading day, dragging the NYSE Arca Gold Bugs Index down by 3.7 percent. The weakness in the sector came amid a steep drop by the price of gold, with gold for December delivery plunging $28.80 to $1,147.30.

Substantial weakness was also visible among semiconductor stocks, as reflected by the 3 percent loss posted by the Philadelphia Semiconductor Index. With the loss, the index pulled back further off the three-month closing high set last Friday.

NXP Semiconductors (NXPI) helped to lead the sector lower after reporting mixed third quarter results and providing disappointing guidance.

Housing stocks also came under pressure on the heels of the disappointing pending home sales data, resulting in a 2 percent drop by the Philadelphia Housing Sector Index. Meritage (MTH) posted a steep loss after reporting weaker than expected third quarter earnings.

Steel, networking, and brokerage stocks also saw notable weakness on the day, while trucking stocks showed a strong move back to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index crept up by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.6 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 0.7 percent, the German DAX Index dipped by 0.3 percent and the French CAC 40 Index edged down y 0.1 percent.

In the bond market, treasuries moved notably lower, extending the downward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.1 basis points to 2.173 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to the latest batch of economic data, including reports on personal income and spending, consumer sentiment and Chicago-area business activity.

On the earnings front, oil giants Exxon Mobil (XOM) and Chevron (CVX) are among the companies due to report their quarterly results before the start of trading on Friday.