U.S. Stocks Regain Ground After Early Sell-Off But Remain Firmly Negative
After moving sharply lower early in the session, stocks have regained some 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 firmly in negative territory.
Currently, the major averages are stuck in the red. The Dow is down 239.58 points or 0.7 percent at 34,442.21, the Nasdaq is down 122.54 points or 0.8 percent at 14,542.52 and the S&P 500 is down 34.57 points or 0.8 percent at 4,323.56.
Concerns about the outlook for the global economy contributed to the early sell-off on Wall Street amid considerable weakness in the overseas markets.
News that Japan has declared a new state of emergency for Tokyo ahead of the Olympic Games has added to worries about the impact of new coronavirus variants.
The U.S. economy has recovered strongly from the pandemic-induced slump, but the rapid spread of variants in other parts of the world has raised concerns about a global slowdown.
Adding to the negative sentiment on Wall Street, the Labor Department released a report showing initial jobless claims unexpectedly inched higher in the week ended July 3rd.
The Labor Department said initial jobless claims crept up to 373,000, an increase of 2,000 from the previous week’s revised level of 371,000.
The uptick surprised economists, who had expected jobless claims to drop to 350,000 from the 364,000 originally reported for the previous week.
A continued drop in bond yields also weighed on banking stocks, while energy stocks saw further downside amid an early decrease by the price of crude oil.
However, bond yields have climbed well off their lows and the price of crude has turned higher, partly offsetting the early selling pressure.
Gold stocks have moved sharply lower over the course of the session, resulting in a 2.8 percent slump by the NYSE Arca Gold Bugs Index.
The weakness among gold stocks comes amid a downturn by the price of the precious metal, with gold for August delivery falling $5.70 to $1,796.40 an ounce after reaching a high of $1,819.50 an ounce.
Significant weakness also remains visible among transportation stocks, as reflected by the 2.3 percent drop by the Dow Jones Transportation Average. The average has regained some ground since hitting a three-month low.
Steel, brokerage and housing stocks are also seeing considerable weakness in mid-day trading but have climbed off their worst levels of the day.
On the other hand, natural gas stocks have shown a strong move to the upside as the day has progressed, driving the NYSE Arca Natural Gas Index up by 1.5 percent.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index fell by 0.8 percent.
The major European markets showed even more substantial moves to the downside. While the French CAC 40 Index plunged by 2 percent, the German DAX Index and the U.K.’s FTSE 100 Index both tumbled by 1.7 percent.
In the bond market, treasuries have pulled back well off their best levels but remain positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.3 basis points at 1.298 percent after hitting a low of 1.268 percent.
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