Stocks Continue To See Modest Weakness In Mid-Day Trading - U.S. Commentary

(RTTNews) - While selling pressure has remained subdued, stocks continue to see modest weakness in mid-day trading on Thursday. Traders are cashing on the rally seen in the previous session following the release of a batch of disappointing economic data.

The major averages are currently stuck in the red but are off their worst levels of the day. The Dow is down 9.25 points or 0.1 percent at 16,158.72, the Nasdaq is down 14.36 points or 0.4 percent at 4,055.71 and the S&P 500 is down 3.71 points or 0.2 percent at 1,806.94.

The weakness on Wall Street is partly due to profit taking after the strong gains posted in the previous session lifted the Dow and the S&P 500 to new record closing highs.

The rally seen on Wednesday came on the heels of news that the Federal Reserve is reducing its asset purchase program by $10 billion per month beginning in January.

Traders reacted positively to the removal of the recent uncertainty regarding the timing of tapering as well as the Fed's assertion that it will keep interest rates at near-zero levels.

However, a batch of largely disappointing economic data may have raised concerns that the Fed's tapering decision might have been premature.

The Labor Department released a report before the start of trading showing an unexpected increase in initial jobless claims in the week ended December 14th.

The report said initial jobless claims climbed to 379,000, an increase of 10,000 from the previous week's figure of 369,000. Economists had expected jobless claims to drop to 337,000.

While the data likely reflected seasonal factors due to the holidays, jobless claims still reached their highest level since late March.

Not long after the open, the National Association of Realtors released a separate report showing a bigger than expected drop in existing home sales in the month of November.

NAR said existing home sales dropped 4.3 percent to a seasonally adjusted annual rate of 4.90 million in November after falling 3.2 percent to 5.12 million in October. Economists had expected existing home sales to dip to an annual rate of 5.02 million.

Existing home sales fell for the third consecutive month, dropping to their lowest level since a matching rate in December of 2012.

A separate report from the Philadelphia Federal Reserve showed that its index of regional manufacturing activity rose by much less than expected in December.

Sector News

Gold stocks continue to see considerable weakness after bucking the uptrend seen in the previous session. The NYSE Arca Gold Bugs Index is down by 2 percent, although it has climbed off the five-year low set earlier in the session.

The continued weakness among gold stocks comes amid a sharp drop by the price of the precious metal, with gold for February delivery plunging $36.20 to $1,198.80 an ounce.

Significant weakness also remains visible among commercial real estate stocks, as reflected by the 1.6 percent loss being posted by the Morgan Stanley REIT Index. The index is giving back some ground after closing higher for four straight sessions.

Oil service, airline, and housing stocks have also moved to the downside on the day, while some strength has emerged among steel and natural gas stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index jumped by 1.7 percent, while Hong Kong's Hang Seng Index slumped by 1.1 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index surged up by 1.4 percent, the French CAC 40 Index and the German DAX Index soared by 1.6 percent and 1.7 percent, respectively.

In the bond market, treasuries are seeing notable weakness as traders continue to digest the Fed's decision to start tapering. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.3 basis points at 2.938 percent.