Stocks Close Sharply Lower Following Late-Day Sell-Off - U.S. Commentary

(RTTNews) - After turning in a mixed performance in morning trading on Thursday, stocks moved sharply lower over the course of the afternoon. With the sell-off on the day, the Nasdaq pulled back to its lowest closing level in a month.

The major averages ended the session firmly in negative territory. The Dow tumbled 210.79 points or 1.2 percent to 17,830.76, the Nasdaq plummeted 57.85 points or 1.2 percent to 4,805.29 and the S&P 500 slumped 19.34 points or 0.9 percent to 2,075.81.

The late-day sell-off was triggered in part by comments by billionaire investor Carl Icahn, who told CNBC he sold his stake in tech giant Apple (AAPL).

Apple subsequently slumped by 3.1 percent, extending the steep drop seen in the previous session in reaction to its disappointing second quarter results.

Negative sentiment was also generated by a Commerce Department report released earlier in the day showing that U.S. economic growth slowed by more than anticipated in the first quarter.

The report said gross domestic product rose by 0.5 percent in the first quarter compared to the 1.4 percent increase in the fourth quarter. Economists had expected the pace of growth to slow to 0.7 percent.

The slower growth partly reflected a larger decrease in non-residential fixed investment, a deceleration in consumer spending and a downturn in federal government spending.

Meanwhile, the Commerce Department also said its reading on core consumer prices, which exclude food and energy prices, surged up by 2.1 percent in the first quarter after rising by 1.3 percent in the fourth quarter.

James Knightley, Senior Economist at ING, said, "Looking at these two outcomes together, the report doesn't really give us a clear guide as to whether the Fed is more likely to hike at June."

The Federal Reserve's monetary policy announcement on Wednesday left the door open for a June rate hike but offered no guarantees.

"We think we will need to see a decent bounce in the activity data for a June hike to occur," Knightley said. "We still favor a September move with the Fed then waiting until 2017 before hiking again."

Traders were also digesting the Bank of Japan's unexpected decision to leave monetary policy unchanged, which disappointed investors looking for further stimulus.

Despite the pullback by the broader markets, social media giant Facebook (FB) held on to a strong gain after reporting better than expected first quarter results.

Sector News

Brokerage stocks saw substantial weakness on the day, resulting in a 4 percent drop by the NYSE Arca Broker/Dealer Index. The index pulled back well of the three-month closing high set last Friday.

Piper Jaffray (PJC) helped to lead the brokerage sector lower, tumbling by 16.5 percent after reporting weaker than expected first quarter earnings.

Considerable weakness was also visible among trucking stocks, as reflected by the 2.8 percent decline by the Dow Jones Trucking Index. YRC Worldwide (YRCW) posted a steep loss ahead of the release of its first quarter results after the close of trading.

Housing stocks also saw significant weakness on the day, dragging the Philadelphia Housing Sector Index down by 2.7 percent. Beazer Homes (BZH) fell sharply after reporting a second quarter net loss.

Semiconductor, computer hardware, software, and energy stocks also came under pressure, while gold stocks held on to substantial gains amid an increase by the price of the precious metal.

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 plunged by 3.6 percent, while Hong Kong's Hang Seng Index crept up by 0.1 percent.

The major European markets also ended the day mixed after recovering from early weakness. While the French CAC 40 Index closed just below the unchanged line, the U.K.'s FTSE 100 Index closed slightly higher and the German DAX Index edged up by 0.2 percent.

In the bond market, treasuries showed a lack of direction for much of the session before closing modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.2 basis points to 1.838 percent.

Looking Ahead

A slew of U.S. economic data is scheduled to be released on Friday, including reports on personal income and spending, consumer sentiment, and Chicago-area business activity.

With regard to earnings, Amazon (AMZN), Amgen (AMGN), Expedia (EXPE), and LinkedIn (LNKD) are among the companies releasing their quarterly results after the close of today's trading.

Oil giants Chevron (CVX) and Exxon Mobil (XOM) are also due to report their results before the start of trading on Friday.