Stocks Come Under Pressure, Extending Recent Downward Move - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks have come under pressure over the course of the trading day on Thursday. With the pullback on the day, the major averages are moving lower for the third consecutive session.

The major averages have seen further downside in recent trading, hitting new lows for the session. The Dow is down 102.19 points or 0.6 percent at 17,748.85, the Nasdaq is down 15.19 points or 0.3 percent at 5,156.58 and the S&P 500 is down 11.03 points or 0.5 percent at 2,103.12.

The weakness that has emerged on Wall Street partly reflects another negative reaction to the latest batch of earnings news.

Shares of Qualcomm (COM) have moved sharply lower on the day after the mobile chip maker reported better than expected third quarter earnings but provided weak guidance for the current quarter and slashed its outlook for the full year.

Credit card giant American Express (AXP) is also moving lower after reporting second quarter earnings that exceeded estimates but on revenues that came in below forecasts.

Dow components Caterpillar (CAT) and 3M (MMM) have also come under pressure after providing disappointing guidance.

On the other hand, General Motors (GM) is holding on to a strong gain after reporting better than expected second quarter earnings. The auto giant also said its second half will be even better than the first.

Memory chip maker SanDisk (SNDK) has also moved notably higher after reporting second quarter results that exceeded analyst estimates.

In economic news, the Labor Department released a report before the start of trading showing first-time claims for U.S. unemployment benefits tumbled to their lowest level in over forty years in the week ended July 18th.

The report said initial jobless claims dropped to 255,000, a decrease of 26,000 from the previous week's unrevised level of 281,000. Economists had expected jobless claims to edge down to 279,000.

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

Separately, the Conference Board said its index of leading U.S. economic indicators rose more than expected in June, pointing to continued strength in the economic outlook for the remainder of the year.

Sector News

Railroad stocks continue to see considerable weakness in mid-day trading, with the Dow Jones Railroads Index down by 3.3 percent. With the drop, the index has fallen to its lowest intraday level in over a year.

Union Pacific (UNP) has helped to lead the railroad sector lower falling by 4.5 percent after reporting weaker than expected second quarter revenues.

Substantial weakness has also emerged among gold stocks, as reflected by the 3.1 percent loss being posted by the NYSE Arca Gold Bugs Index. The losses by gold stocks come despite an increase by the price of the precious metal.

Telecom, natural gas, and utilities stocks have also come under considerable selling pressure over the course of the session.

On the other hand, significant strength remains visible among networking, computer hardware, and semiconductor stocks.

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 rose by 0.4 percent, while Australia's All Ordinaries Index fell by 0.4 percent.

The major European indexes also ended the day on opposite sides of the unchanged line. While the French CAC 40 Index inched up by 0.1 percent, the German DAX Index and the U.K.'s FTSE 100 Index edged down by 0.1 percent and 0.2 percent, respectively.

In the bond market, treasuries have moved modestly higher after initially showing a lack of direction. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.5 basis points at 2.307 percent.