Stocks Close Modestly Lower After Seeing Early Strength - U.S. Commentary

(RTTNews) - After an early move to the upside, stocks turned lower over the course of the trading session on Thursday. The Dow pulled back into negative territory after reaching a new record intraday high.

While the Dow dipped 76.77 points or 0.3 percent to 24,508.66, the Nasdaq fell 19.27 points or 0.3 percent to 6,856.53 and the S&P 500 slid 10.83 points or 0.4 percent to 2,652.01.

The downturn by stocks came amid uncertainty about the outlook for the Republican tax reform plan after Senator Marco Rubio, R-Fla., indicated his opposition to the legislation currently being negotiated.

Rubio wants an expansion of the proposed child tax credit, while Senator Bob Corker, R-Tenn., voted against the original Senate bill due to concerns about the cost of the plan.

Republicans can only afford to lose two votes in the Senate and still pass the bill with a tie-breaking vote by Vice President Mike Pence.

The initial strength on Wall Street came following the release of a batch of upbeat economic data, including a report from the Commerce Department showing a bigger than expected increase in retail sales in the month of November.

The report said retail sales climbed by 0.8 percent in November after rising by an upwardly revised 0.5 percent in October.

Economists had expected retail sales to increase by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

Excluding a modest decrease in sales by motor vehicle and parts dealers, retail sales surged up by 1.0 percent in November after climbing by 0.4 percent in October.

A separate report released by the Labor Department showed an unexpected decrease in initial jobless claims in the week ended December 9th.

The report said initial jobless claims dropped to 225,000, a decrease of 11,000 from the previous week's unrevised level of 236,000. Economists had expected jobless claims to inch up to 239,000.

Another report released by the Labor Department showed import prices increased in line with economist estimates in the month of November, while export prices rose by much more than anticipated.

The Labor Department said its import price index climbed by 0.7 percent in November after inching up by 0.1 percent in October.

Export prices rose by 0.5 percent in November after ticking up by 0.1 percent in the previous month. Economists had expected export prices to edge up by 0.2 percent.

Meanwhile, the Commerce Department released a report showing a modest decrease in business inventories in the month of October.

The Commerce Department said business inventories edged down by 0.1 percent in October after showing no change in September. The slight drop in inventories matched economist estimates.

Biotechnology stocks showed a significant move to the downside on the day, dragging the NYSE Arca Biotechnology Index down by 2.2 percent.

Telecom, steel, brokerage, and trucking stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index fell by 0.3 percent, while Hong Kong's Hang Seng Index dipped by 0.2 percent.

The major European markets also moved to the downside on the day. While the German DAX Index dropped by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index slumped by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries ended the day roughly flat after recovering from morning weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.346 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to reports on New York manufacturing activity and industrial production.