Stocks Close Modestly Lower But Well Off Worst Levels - U.S. Commentary

(RTTNews) - After recovering from an early move to the downside, stocks turned in a lackluster performance throughout the remainder of the session on Thursday. The major averages spent the rest of the day bouncing back and forth across the unchanged line before closing modestly lower.

While the major averages ended the day in the red, they were well off their lows for the session. The Dow dipped 40.31 points or 0.2 percent to 17,678.23, the Nasdaq slid 13.16 points or 0.3 percent to 4,863.36 and the S&P 500 edged down 4.90 points or 0.2 percent to 2,056.15.

The early weakness on Wall Street was partly due to geopolitical concerns amid news that Saudi Arabia and its allies have launched air strikes against the Houthi rebels in Yemen.

The news led to worries about a broader sectarian conflict in the Middle East, as the Saudis consider the Houthi rebels as proxies for Iran.

Crude oil moved notably higher on the news of the escalation of the conflict, with crude for May delivery jumping $2.22 to $51.43 a barrel.

Negative sentiment was also generated by comments from French prosecutor Brice Robin indicating that the co-pilot of the Germanwings flight that crashed in the French Alps brought the plane down deliberately.

The news weighed on the airline sector even though Robin claimed there are no grounds to consider the crash as a terrorist incident.

Nonetheless, selling pressure waned not long after the start of trading, inspiring some traders to pick up stocks at reduced levels.

The pullback seen over the past few days dragged the Dow and the Nasdaq down to their lowest levels in well over a month early in the session.

On the economic front, the Labor Department released a report before the start of trading showing a bigger than expected pullback in initial jobless claims in the week ended March 21st.

The report said initial jobless claims fell to 282,000, a decrease of 9,000 from the previous week's unrevised level of 291,000. Economists had expected jobless claims to edge down to 290,000.

Sector News

Reflecting the lack of direction shown by the broader markets for much of the session, most of the major sectors ended the day showing only modest moves.

Gold stocks showed a significant move to the downside, however, with the NYSE Arca Gold Bugs Index tumbling by 1.8 percent. The weakness in the sector came even though gold for April delivery climbed $7.80 to $1,204.80 an ounce.

Considerable weakness was also visible among airline stocks, as reflected by the 1.6 percent loss posted by the NYSE Arca Airline Index. Concerns about the impact of the news regarding the Germanwings crash weighed on the sector.

Semiconductor, steel, and railroad stocks also came under pressure on the day, with SanDisk (SNDK) leading the semiconductor sector lower after the memory chip maker cut its first quarter revenue guidance.

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 1.4 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1.4 percent, the French CAC 40 Index and the German DAX Index dipped by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries showed a notable move to the downside, pulling back further off their recent highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped by 8.7 basis points to 2.007 percent.

Looking Ahead

Revised fourth quarter GDP data as well as a report on consumer sentiment may attract some attention on Friday, although traders are also likely to keep an eye on remarks by Federal Reserve Chair Janet Yellen late in the day.