Stocks Close Moderately Lower As Trump Inauguration Looms - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks moved moderately lower over the course of the trading session on Thursday. The Dow closed lower for the fifth consecutive session, falling to its lowest closing level in over a month.

The major averages closed in negative territory but off their worst levels of the day. The Dow fell 72.32 points or 0.4 percent to 19,732.40, the Nasdaq dipped 15.57 points or 0.3 percent to 5,540.08 and the S&P 500 slid 8.20 points or 0.4 percent to 2,263.69.

The weakness on Wall Street was partly due to uncertainty about President-elect Donald Trump's policies ahead of his inauguration on Friday.

Trump's surprise victory initially triggered a rally on Wall Street, but traders have recently expressed caution as they wait to see what he will actually do once officially in office.

On the U.S. economic front, first-time claims for U.S. unemployment benefits unexpectedly declined in the week ended January 14th, according to a report released by the Labor Department.

The report said initial jobless claims fell to 234,000, a decrease of 15,000 from the previous week's revised level of 249,000. Economists had expected jobless claims to rise to 255,000.

A separate report from the Commerce Department showed a significant rebound in housing starts in the month of December.

The Commerce Department said housing starts jumped by 11.3 percent to an annual rate of 1.226 million in December from the revised November rate of 1.102 million.

Economists had expected housing starts to rise to an annual rate of 1.200 million from the 1.090 million originally reported for the previous month.

Meanwhile, the report said building permits, an indicator of future housing demand, edged down by 0.2 percent to a rate of 1.210 million in December from 1.212 million in November.

Building permits had been expected to rise to 1.230 million from the 1.201 million originally reported for the previous month.

Additionally, the Federal Reserve Bank of Philadelphia said regional manufacturing activity unexpectedly grew at a faster pace in the month of January.

The Philly Fed said its index for current manufacturing activity in the region rose to 23.6 in January from a revised 19.7 in December, with a positive reading indicating growth.

The increase came as a surprise to economists, who had expected the index to drop to 16.0 from the 21.5 originally reported for the previous month.

Overseas, the European Central Bank left its key interest rates unchanged and maintained its asset purchases, confirming that they will continue at a reduced pace till the end of this year.

Sector News

Steel stocks came under pressure on the day, giving back ground after yesterday's rally. The NYSE Arca Steel Index slumped by 1.9 percent after ending the previous session at its best closing level in over a month.

Trucking stocks also showed a significant move to the downside, dragging the Dow Jones Trucking Index down 1.8 percent. With the drop, the index fell to its lowest closing level in well over a month.

J.B. Hunt (JBHT) led the sector lower, tumbling by 3.7 percent after reporting weaker than expected fourth quarter earnings.

Electronic storage, commercial real estate, and pharmaceutical stocks also came under pressure, contributing to the lower close by the broader markets.

On the other hand, railroad stocks moved sharply higher on the day, driving the Dow Jones Railroads Index up by 6.9 percent to its best closing level since early 2015.

CSX Corp. (CSX) led the sector higher amid reports outgoing Canadian Pacific (CP) CEO Hunter Harrison is teaming up with activist investors to target the railroad.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Australia's All Ordinaries Index rose by 0.2 percent. However, Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index closed just below the unchanged line, the French CAC 40 Index dipped by 0.3 percent and the U.K.'s FTSE 100 Index fell by 0.5 percent.

In the bond market, treasuries extended the pullback seen in the previous session, closing notably lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7 basis points to 2.459 percent.

Looking Ahead

Amid a quiet day on the U.S. economic front, trading on Friday may be impacted by reaction to Trump's inaugural address.

Energy news may also drive trading, with American Express (AXP) and IBM (IBM) among the companies releasing their quarterly results after the close of today's trading.

General Electric (GE) and Procter & Gamble (PG) are also due to report their results before the start of trading on Friday.