Profit Taking Contributes To Lower Close On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved mostly lower over the course of the trading session on Thursday after showing a lack of direction earlier in the session. The pullback on the day partly offset the upward trend seen over the past several sessions.

The major averages all closed in the red, although the Nasdaq posted only a modest loss. While the Nasdaq edged down 2.24 points or 0.1 percent to 4,945.89, the Dow slid 113.75 points or 0.6 percent to 17,982.52 and the S&P 500 dropped 10.92 points or 0.5 percent to 2,091.48.

The weakness that emerged on Wall Street may partly have reflected profit taking on the heels of the recent strength in the markets.

The recent gains lifted the Dow to its highest levels since last July, while the S&P 500 reached a nearly five-month closing high on Wednesday.

With earnings season rolling on, traders also reacted negatively to the quarterly results from some big-name companies.

Shares of Travelers (TRV) came under pressure after the insurer reported weaker than expected first quarter earnings due to casualty losses related to storms in Texas.

Telecom giant Verizon (VZ) also moved to the downside after reporting first quarter revenues that came in slightly below analyst estimates.

On the other hand, shares of General Motors (GM) closed higher after the auto giant reported first quarter results that exceeded expectations.

Traders were also digesting the latest U.S. economic news, including a report from the Labor Department showing that initial jobless claims fell to their lowest level in over forty years in the week ended April 16th.

The Labor Department said jobless claims edged down to 247,000, a decrease of 6,000 from the previous week's unrevised level of 253,000. Economists had expected claims to rise to 265,000.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 233,000 in November of 1973.

Meanwhile, the Philadelphia Federal Reserve released a separate report showing an unexpected contraction in regional manufacturing activity in April.

Sector News

Utilities stocks came under pressure over the course of the session, as reflected by the 2.5 percent drop by the Dow Jones Utilities Average. The average matched the 2.5 percent loss posted on Wednesday, falling to its lowest closing level in well over a month.

NiSource (NI), American Water Works (AWK), and Con Ed (ED) turned in some of the utilities sector's worst performances on the day.

Airline stocks also showed a significant move to the downside on the day, dragging the NYSE Arca Airline Index down by 2.4 percent. With the decrease, the index pulled back further off the nine-month closing high it set on Tuesday.

United Continental (UAL) led the sector lower after reporting better than expected first quarter earnings but forecasting a drop in passenger revenue per available seat mile in the second quarter.

Steel, trucking, telecom, and commercial real estate also came under pressure on the day, contributing to the lower close by the broader markets.

On the other hand, biotechnology stocks moved sharply higher, driving the NYSE Arca Biotechnology Index up by 2.7 percent. The gain lifted the index to a three-month closing high.

Agios Pharmaceuticals (AGIO) posted a standout gain, surging up by 10.5 percent to its best closing level in almost three months.

Notable strength was also visible among gold stocks, with the NYSE Gold Bugs Index jumping by 2.6 percent. The strength in the sector came despite a decrease by the price of gold.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index surged up by 2.7 percent, while Hong Kong's Hang Seng Index jumped by 1.8 percent.

Meanwhile, the major European markets ended the day mixed. While the German DAX Index crept up by 0.1 percent, the French CAC 40 Index edged down by 0.2 percent and the U.K.'s FTSE 100 Index fell by 0.5 percent.

In the bond market, treasuries moved moderately lower, extending the steep drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.6 basis points to 1.87 percent.

Looking Ahead

Amid a relatively quiet day on the U.S. economic front, trading on Friday is likely to be impacted by reaction to the latest earnings news.

Google parent Alphabet (GOOG), Microsoft (MSFT) and Visa (V) are among the companies releasing their quarterly result after the close of today's trading.

Caterpillar (CAT), General Electric (GE), Honeywell (HON), and McDonald's (MCD) are also due to report their results before the start of trading on Friday.