Stocks Remain Stuck In The Red In Mid-Day Trading - U.S. Commentary

(RTTNews) - After coming under pressure earlier in the session, stocks remain mostly negative in mid-day trading on Thursday. The losses on the day extend a recent pullback by the markets, with the tech-heavy Nasdaq moving lower for the fourth straight day.

Currently, the major averages remain stuck in the red, although they are off their worst levels of the day. The Dow is down 78.64 points or 0.4 percent at 17,956.89, the Nasdaq is down 45.22 points or 0.9 percent at 4,978.42 and the S&P 500 is down 10.47 points or 0.5 percent at 2,096.38.

The weakness on Wall Street partly reflects continued uncertainty about the outlook for interest rates following the Federal Reserve's monetary policy announcement on Wednesday.

The Fed's statement failed to provide specific guidance regarding interest rates, although several analysts noted the central bank did not rule out a rate hike at the June meeting.

Traders are also cashing in on the strength seen in the markets over the past few weeks, which lifted the Nasdaq and the S&P 500 to record closing highs last Friday.

In light of the Fed's insistence that future monetary policy decisions will be data-dependent, traders are likely to keep a close eye on incoming economic data.

The Labor Department released a report before the start of trading showing that first-time claims for U.S. unemployment benefits pulled back to their lowest level in fifteen years in the week ended April 25th.

The Labor Department said initial jobless claims dropped to 262,000, a decrease of 34,000 from the previous week's revised level of 296,000. Economists had expected jobless claims to edge down to 288,000.

With the much bigger than expected decrease, jobless claims fell to their lowest level since hitting 259,000 in the week ended April 15, 2000.

The Commerce Department released a separate report showing a continued increase in U.S. personal spending in the month of March, although the report also said personal income was unexpectedly flat.

The report said personal spending rose by 0.4 percent in March following an upwardly revised 0.2 percent increase in February. Economists had expected spending to climb by 0.5 percent.

Meanwhile, the Commerce Department said personal income inched up by less than a tenth of a percent in March after increasing by 0.4 percent in February. Income had been expected to rise by 0.2 percent.

Sector News

While many of the major sectors have climbed well off their worst levels of the day, substantial weakness remains visible among gold stocks. The NYSE Arca Gold Bugs Index is down by 2.5 percent after ending the previous session at its best closing level in almost two months.

The pullback by gold stocks comes amid a steep drop by the price of the precious metal, with gold for June delivery plunging $30.60 to $1,179.40 an ounce.

Biotechnology stocks also continue to see significant weakness in mid-day trading, as reflected by the 1.7 percent loss being posted by the NYSE Arca Biotechnology Index. With the drop, the index has fallen to a two-month intraday low.

Celgene (CELG) is turning in one of the biotech sector's worst performances after reporting better than expected first quarter earnings but on weaker than expected revenues.

Utilities, networking, and brokerage stocks are also seeing continued weakness on the day, although selling pressure has waned from earlier in the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index plunged by 2.7 percent, while Hong Kong's Hang Seng Index dropped by 0.9 percent.

Meanwhile, the major European markets ended the day modestly higher. While the French CAC 40 Index inched up by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index both edged up by 0.2 percent.

In the bond market, treasuries are extending the notable downward move seen over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.1 basis points at 2.096 percent.