Stocks have regained ground after falling sharply early in the session but remain mostly lower in late morning trading on Thursday. With the drop on the day, the major averages are adding to the steep losses posted in the two previous sessions.
Currently, the major averages are well off their worst levels of the day but stuck in negative territory. The Dow is down 119.31 points or 0.5 percent at 23,128.66, the Nasdaq is down 89.95 points or 1 percent at 8,773.22 and the S&P 500 is down 19.74 points or 0.7 percent at 2,800.26.
The early sell-off on Wall Street reflected renewed concerns about the economic outlook after Federal Reserve Chair Jerome Powell warned of “significant downside risks” during a speech on Wednesday.
Powell’s comments have offset the optimism about a quick economic recovery that helped to drive stocks well off their March lows.
A number of economists have previously warned that the economy is not likely to see a V-shaped recovery, but the comments from Powell seem to have hit home with investors.
Adding to the negative sentiment, the Labor Department released a report showing a much smaller than expected decrease in first-time claims for unemployment benefits in the week ended May 9th.
The report said initial jobless claims fell to 2.981 million, a decrease of 195,000 from the previous week’s revised level of 3.176 million.
However, economists had expected jobless claims to tumble to 2.5 million from the 3.169 million originally reported for the previous week.
Jobless claims have steadily decreased since reaching a record high of 6.867 million in late March, but the number of new claims has reached nearly 36.5 million since the coronavirus-induced economic shutdown.
“While initial claims for unemployment benefits continue to retreat from their peak, they remain at levels consistent with a labor market in distress,” said a note from economists at Oxford Economics.
They added, “And the headline figures don’t tell the full story since they don’t capture individuals receiving benefits under state and emergency programs.”
A separate report released by the Labor Department showed steep drops in both import and export prices in the U.S. in the month of April.
Housing stocks have shown a substantial move to the downside on the day, dragging the Philadelphia Housing Sector Index down by 2.6 percent.
Significant weakness is also visible among biotechnology stocks, as reflected by the 1.9 percent slump by the NYSE Arca Biotechnology Index.
Tobacco, semiconductor and software stocks are also seeing considerable weakness, while gold stocks have moved sharply higher along with the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index plummeted by 1.7 percent, while China’s Shanghai Composite Index slid by 1 percent.
The major European markets have also shown substantial moves to the downside. While the U.K.’s FTSE 100 Index has plunged by 3.3 percent, the French CAC 40 Index and the German DAX Index are both down by 2.5 percent.
In the bond market, treasuries are extending the upward move seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.7 basis points at 0.612 percent.
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