U.S. Stocks Regain Ground But Remain Mostly Lower

After moving sharply lower early in the session, stocks have regained ground over the course of the trading day on Thursday. The major averages have climbed well off their worst levels of the day but remain in negative territory.

Currently, the major averages are posting moderate losses. The Dow is down 138.77 points or 0.5 percent at 30,890.54, the Nasdaq is down 69.80 points or 0.6 percent at 11,108.10 and the S&P 500 is down 12.31 points or 0.3 percent at 3,806.52.

The early sell-off on Wall Street came amid lingering concerns about the global economic outlook and the possibility of a recession.

Central bank chiefs have recently reaffirmed their resolve to bring down inflation despite threats to economic growth.

A report from the Commerce Department provided further evidence of an economic slowdown, showing personal spending increased by less than expected in the month of May.

The Commerce Department personal spending edged up by 0.2 percent in May after climbing by a downwardly revised 0.6 percent in April.

Economists had expected personal spending to increase by 0.5 percent compared to the 0.9 percent advance originally reported for the previous month.

Real personal spending, which excludes price changes, fell by 0.4 percent in May after rising by 0.3 percent in April.

“The larger than expected 0.4% fall in real consumption in May, together with downward revisions to gains in previous months, means we now expect consumption to rise by just 0.8% annualized in the second quarter, down sharply from our previous estimate of close to 3.0%,” said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, “As a result, second quarter GDP growth is now on track to be closer to 1.0% annualized, down from our previous estimate of 2.7%, and we expect growth to remain below trend over the second half of the year too.”

While the report also showed a slowdown in the annual rate of core consumer price growth, Pearce said the data does not present the “clear and compelling” evidence the Federal Reserve needs to shift to less aggressive rate hikes.

Selling pressure has waned over the course of the session, however, with some traders using the early weakness as an opportunity to pick up stocks at reduced levels.

Sector News

Despite the recovery attempt by the broader markets, gold stocks continue to see substantial weakness in afternoon trading. The NYSE Arca Gold Bugs Index is down by 3.4 percent after hitting its lowest intraday level in over two years.

The weakness in the gold sector comes amid a relatively modest decrease by the price of the precious metal, with gold for August delivery falling $7.70 to $1,809.80 an ounce.

Steel stocks have climbed off their worst levels of the day but also remain firmly negative, resulting in a 1.8 percent slump by the NYSE Arca Steel Index.

Tobacco, banking and airline stocks also continue to see notable weakness, while interest rate-sensitive utilities, housing and commercial real estate stocks have moved to the upside.

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 slumped by 1.5 percent, while China’s Shanghai Composite Index jumped by 1.1 percent.

Meanwhile, the major European markets all moved sharply lower on the day. While the U.K.’s FTSE 100 Index plunged by 2 percent, the French CAC 40 Index and the German DAX Index tumbled by 1.8 percent and 1.7 percent, respectively.

In the bond market, treasuries are extending the strong upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 11.3 basis points at 2.980 percent.

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