Stocks See Further Downside Following Early Decline - U.S. Commentary

(RTTNews) - After moving lower early in the session, stocks have seen some further downside over the course of the trading day on Thursday. With the pullback on the day, the major averages have largely offset the gains posted in the previous session.

Currently, the major averages are just off their worst levels of the day. The Dow is down 120.51 points or 0.6 percent at 21,334.10, the Nasdaq is down 94.83 points or 1.5 percent at 6,139.58 and the S&P 500 is down 19.25 points or 0.8 percent at 2,421.44.

The pullback on Wall Street is partly due to renewed weakness among technology stocks, which saw a notable rebound on Wednesday.

Semiconductor stocks have shown a substantial move to the downside, dragging the Philadelphia Semiconductor Index down by 2.7 percent. The index hit its lowest intraday level in well over a month earlier in the session.

Infinera (INFN), Nvidia (NVDA) and ASML (AMSL) are turning in some of the semiconductor sector's worst performances in mid-day trading.

Computer hardware, internet, and networking stocks are also seeing considerable weakness, contributing to the steep drop by the tech-heavy Nasdaq.

Outside of the tech sector, gold stocks have also come under pressure, dragging the NYSE Arca Gold Bugs Index down by 2.1 percent. Gold stocks are moving lower along with the price of the precious metal.

On the other hand, banking stocks continue to see significant strength, although they have pulled back well off their best levels of the day. After reaching a three-month intraday high, the Dow Jones Banks Index is up by 1.2 percent.

The strength among banking stocks comes after the Federal Reserve approved the capital return plans of all 34 of the nation's biggest banks as part of its annual stress test.

A number of financial giants have subsequently announced dividend increases and stock buybacks, with Citigroup (C) and JP Morgan (JPM) announcing their biggest share repurchase plans on record.

Energy stocks are also seeing notable strength on the day as the price of crude oil for August delivery is rising $0.31 to $45.05 a barrel.

In economic news, the Commerce Department released a report showing stronger than previously estimated U.S. economic growth in the first quarter.

The report said gross domestic product climbed by 1.4 percent in the first quarter compared to the previously reported 1.2 percent increase. Economists had expected GDP growth to be unrevised.

Meanwhile, a separate report from the Labor Department showed a slight increase in initial jobless claims in the week ended June 24th.

The report said initial jobless claims inched up to 244,000, an increase of 2,000 from the previous week's revised level of 242,000. Economists had expected jobless claims to edge down to 240,000.

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Thursday. Japan's Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent.

Meanwhile, the major European markets moved lower on the day. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the German DAX Index and the French CAC 40 Index plunged by 1.8 percent and 1.9 percent, respectively.

In the bond market, treasuries have climbed off their worst levels but remain firmly in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.9 basis points at 2.270 percent.