U.S. Stocks Finish Lackluster Session Modestly Lower

(RTTNews) - Following the sell-off seen late in the previous session, stocks showed a lack of direction over the course of the trading day on Thursday. The major averages spent the day bouncing back and forth across the unchanged line before eventually closing in negative territory.

The Dow slid 170.64 points or 0.5 percent to 36,236.47, pulling back further off the record closing high set on Tuesday. The Nasdaq dipped 19.31 points or 0.1 percent to 15,080.87 and the S&P 500 edged down 4.53 points or 0.1 percent to 4,696.05.

The choppy trading on Wall Street partly reflected uncertainty about the near-term outlook for the markets following the steep drop seen on Wednesday.

Stocks came under pressure late in the previous session in reaction to the minutes of the latest Federal Reserve meeting.

The minutes of the Fed's December meeting had a hawkish tone, suggesting the central bank will more aggressive in tightening monetary policy.

In addition to raising rates more quickly than previously anticipated, the minutes also indicated the Fed plans to begin reducing its balance sheet shortly after the first rate hike.

Traders may also have been reluctant to continue making significant moves ahead of Friday's closely watched monthly jobs report.

Economists currently expect employment to jump by 400,000 jobs in December after rising by 210,000 jobs in November. The unemployment rate is expected to edge down to 4.1 percent from 4.2 percent.

With the monthly jobs report looming, the Labor Department released a report this morning unexpectedly showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended January 1st.

The report showed initial jobless claims crept up to 207,000, an increase of 7,000 from the previous week's revised level of 200,000.

The uptick came as a surprise to economists, who had expected jobless claims to edge down to 197,000 from the 198,000 originally reported for the previous week.

A separate report from the Institute for Supply Management showed U.S. service sector growth slowed from a record high in the month of December.

The ISM said its services PMI slid to 62.0 in December from 69.1 in November, although a reading above 50 still indicates growth. Economists had expected the index to drop to 66.9.

Sector News

Gold stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Gold Bugs Index down by 3.3 percent.

The sell-off by gold stocks came amid a steep drop by the price of the precious metal, with gold for February delivery plunging $35.90 to $1,789.20 an ounce.

Significant weakness also emerged among computer hardware stocks, as reflected by the 1.5 percent drop by the NYSE Arca Computer Hardware Index. The index pulled back further off Tuesday's record closing high.

Meanwhile, banking stocks moved sharply higher amid a continued increase in treasury yields, driving the KBW Bank Index up by 3.3 percent to a record closing high.

Energy stocks also saw considerable strength on the day amid continued surge by the price of crude oil. Crude for February delivery jumped $1.61 to $79.46 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index and the Philadelphia Oil Service Index spiked by 2.8 percent and 2.7 percent, respectively.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index plummeted by 2.9 percent, while China's Shanghai Composite Index fell by 0.3 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slid by 0.9 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.4 percent and 1.7 percent, respectively.

In the bond market, treasuries extended the notable downward move seen over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to a nine-month closing high of 1.733 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the Labor Department's closely watched monthly jobs report.