Stocks Close Modestly Lower For Second Straight Day - U.S. Commentary

(RTTNews) - Following the modest pullback seen in the previous session, stocks saw continued weakness during trading on Thursday. With the drop, the Dow and the Nasdaq continued to give back ground after reaching record closing highs on Tuesday.

The major averages closed in the red for the second straight day but off their lows of the session. The Dow edged down 23.08 points or 0.1 percent to 19,918.88, the Nasdaq fell 24.01 points or 0.4 percent to 5,447.42 and the S&P 500 dipped 4.22 points or 0.2 percent to 2,260.96.

Profit taking contributed to the continued weakness on Wall Street, although trading activity was relatively light ahead of the holiday weekend.

Traders were also digesting a slew of U.S. economic data, including a Commerce Department report showing a sharp pullback in durable goods orders in the month of November.

The report said durable goods orders tumbled by 4.6 percent in November after surging up by 4.8 percent in October. Economists had expected orders to slump by about 4.4 percent.

Excluding orders for transportation equipment, durable goods orders rose by 0.5 percent in November after climbing by 0.9 percent in October. Ex-transportation orders had been expected to rise by 0.2 percent.

The Commerce Department also said orders for non-defense capital goods excluding aircraft, a closely watched indicator of business spending, climbed by 0.9 percent in November after edging up by 0.2 percent in October.

A separate report from the Commerce Department showed that economic activity increased by more than previously estimated in the third quarter.

The Commerce Department said gross domestic product climbed by 3.5 percent in the third quarter, reflecting an upward revision from the previously reported 3.2 percent increase.

Economists had been expecting the report to show a more modest upward revision to the pace of GDP growth to 3.3 percent.

Meanwhile, the Labor Department also released a report showing that initial jobless claims rose by much more than expected in the week ended December 17th.

The report said initial jobless claims climbed to 275,000, an increase of 21,000 from the previous week's unrevised level of 254,000. Economists had expected jobless claims to inch up to 256,000.

With the much bigger than expected increase, jobless claims rose to their highest level since reaching 277,000 in the week ended June 11th.

Another report from the Commerce Department showed that personal income inched up by less than a tenth of a percent in November after climbing by a revised 0.5 percent in October.

Economists had expected income to rise by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

At the same time, the report said personal spending rose by 0.2 percent in November after climbing by an upwardly revised 0.4 percent in the previous month.

Spending had been expected to increase by 0.3 percent, which would have matched the growth originally reported for October.

Sector News

Steel stocks showed a substantial move to the downside as the trading day progressed, dragging the NYSE Arca Steel Index down by 1.8 percent.

Mechel (MTL), Allegheny Technologies (ATI), and Olympic Steel (ZEUS) turned in some of the steel sector's worst performances.

Considerable weakness was also visible among retail stocks, as reflected by the 1.6 percent loss posted by the Dow Jones Retail Index.

Bed Bath & Beyond (BBBY) fell sharply after reporting third quarter results that came in below analyst estimates and saying full-year earnings are expected to come in at the low end of guidance.

Airline stocks also saw significant weakness, resulting in a 1.6 percent drop by the NYSE Arca Airline Index. JetBlue (JBLU), Alaska Air (ALK), and Delta (DAL) posted notable losses.

Housing, brokerage, and internet stocks also came under pressure on the day, while most of the other major sectors showed more modest moves.

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 edged down by 0.1 percent, while China's Shanghai Composite Index crept up by 0.1 percent.

The major European markets also finished the day mixed. While the German DAX Index dipped by 0.1 percent, the French CAC 40 Index closed just above the unchanged line and the U.K.'s FTSE 100 rose by 0.3 percent.

In the bond market, treasuries showed a lack of direction for much of the session before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.553 percent.

Looking Ahead

Following the slew of data released this morning, trading on Friday may be impacted by reaction to reports on new home sales and consumer sentiment.

Nonetheless, trading activity on the day is likely to remain relatively subdued as traders look to get a head start on the holiday weekend.