Stocks Pull Back More Firmly Into Negative Territory - U.S. Commentary

(RTTNews) - After moving moderately lower earlier in the session, stocks have seen further downside over the course of the trading day on Thursday. The pullback on the day has largely offset the rally that was seen in the previous session.

Currently, the major averages are just off their new lows for the session. The Dow is down 202.43 points or 1.2 percent at 16,082.27, the Nasdaq is down 59.14 points or 1.3 percent at 4,561.03 and the S&P 500 is down 18.45 points or 1 percent at 1,901.58.

The sell-off on Wall Street comes as traders are cashing in on yesterday's gains amid uncertainty ahead of the release of tomorrow's closely watched monthly jobs report.

The Labor Department report is expected to show an increase of about 203,000 jobs in September following the addition of 173,000 jobs in August.

The jobs data could have a significant impact on expectations regarding whether the Federal Reserve will raise interest rates later this month.

Before the start of trading, the Labor Department released a report showing that initial jobless claims rose by more than expected in the week ended September 26th.

The report said initial jobless claims climbed to 277,000, an increase of 10,000 from the previous week's unrevised level of 267,000. Economists had expected jobless claims to edge up to 271,000.

The Institute for Supply Management also released a separate report showing that its reading on activity in the manufacturing sector fell to a two-year low in September.

The ISM said its purchasing managers index dropped to 50.2 in September from 51.1 in August, although a reading above 50 indicates growth in the sector. Economists had expected the index to dip to 50.5.

With the bigger than expected decrease, the manufacturing index fell to its lowest level since hitting 50.1 in May of 2013.

Meanwhile, the Commerce Department released a report showing that construction spending rose slightly more than expected in August amid a jump in spending on residential construction.

Sector News

Semiconductor stocks have moved substantially lower over the course of the trading day, dragging the Philadelphia Semiconductor Index down by 2.8 percent. The index is partly offsetting the 3.8 percent gain posted on Wednesday.

Qorvo (QRVO), NXP Semiconductors (NXPI), and Analog Devices (ADI) are turning in some of the semiconductor sector's worst performances.

Considerable weakness has also emerged among computer hardware stocks, which are also giving back ground after yesterday's rally. The NYSE Arca Computer Hardware Index is down by 2.1 percent, with storage stocks leading the way lower.

Utilities stocks have also come under pressure on the day, resulting in a 1.5 percent drop by the Dow Jones Utilities Average. With the drop, the average is pulling back off its best closing level in a month.

Biotechnology, gold, oil service, and airline stocks have also moved notably lower, reflecting the broad based selling pressure that has emerged on Wall Street.

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 1.9 percent, while Australia's All Ordinaries Index jumped by 1.7 percent. However, the Chinese and Hong Kong Markets were closed.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index fell by 0.7 percent and the German DAX Index tumbled by 1.6 percent.

In the bond market, treasuries have moved to the upside after ending the previous session slightly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.9 basis points at 2.021 percent.