U.S. Stocks Regain Ground After Early Sell-Off But Close Mostly Lower

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After moving sharply lower early in the session, stocks regained ground over the course of the trading day on Thursday but still ended the day mostly lower. The major averages climbed well off their worst levels of the day, with the Nasdaq closing just above the unchanged line.

The tech-heavy Nasdaq plunged as much as 2.1 percent in early trading but ended the day up 3.60 points or less than a tenth of a percent at 11,251.19. Meanwhile, the Dow fell 142.62 points or 0.5 percent to 30,630.17 and the S&P 500 dipped 11.40 points or 0.3 percent to 3,790.38.

The early weakness on Wall Street partly reflected disappointing earnings news from financial giants JPMorgan Chase (JPM) and Morgan Stanley (MS).

JPMorgan slumped by 3.5 percent and Morgan Stanley slipped by 0.4 percent after both companies reported second quarter earnings that missed analyst estimates.

Concerns about inflation and higher interest rates also continued to weigh on the markets after the Labor Department released a report showing U.S. producer prices increased by more than expected in the month of June.

The Labor Department said its producer price index for final demand jumped by 1.1 percent in June after climbing by an upwardly revised 0.9 percent in May.

Economists had expected producer prices to increase by 0.8 percent, matching the advance originally reported for the previous month.

The annual rate of producer price growth accelerated to 11.3 percent in June, reflecting the largest spike since a record 11.6 percent jump in March.

Economists had expected the annual rate of producer price growth to slow to 10.7 percent in June from 10.9 percent in May.

The Labor Department released a separate report on Wednesday showing U.S. consumer prices also surged by more than expected in the month of June.

Another report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly inched higher in the week ended July 9th.

The report showed initial jobless claims crept up to 244,000, an increase of 9,000 from the previous week’s unrevised level of 235,000. The uptick surprised economists, who had expected jobless claims to come in unchanged.

Sector News

Despite the recovery attempt by the broader markets, gold stocks continue to see substantial weakness on the day. The NYSE Arca Gold Bugs Index plunged by 4.6 percent to its lowest closing level in over two years.

The sell-off by gold stocks came amid a steep drop by the price of the precious metal, with gold for August delivery tumbling $29.70 to $1,705.80 an ounce.

Significant weakness also remained visible among steel stocks, as reflected by the 4.2 percent nosedive by the NYSE Arca Steel Index. With the drop, the index fell to a one-year closing low.

Energy stocks also saw considerable weakness on the day, moving lower along with the price of crude oil. Crude for August delivery climbed well off its worst levels of the day but still closed down $0.52 at $95.78 a barrel.

Banking, biotechnology and chemical stocks also showed notable moves to the downside, while semiconductor stocks moved sharply higher over the course of the session.

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 climbed by 0.6 percent, while Hong Kong’s Hang Seng Index dipped by 0.2 percent.

Meanwhile, the major European markets all showed significant moves to the downside on the day. While the German DAX Index plunged by 1.9 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index tumbled by 1.6 percent and 1.4 percent, respectively.

In the bond market, treasuries climbed off their worst levels but remained firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.6 basis points to 2.960 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to a slew of U.S. economic data, including reports on retail sales, industrial production and consumer sentiment.

Earnings news from big-name companies like Citigroup (C), Wells Fargo (WFC) and UnitedHealth (UNH) may also impact the markets.

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