RTTNews - Stocks are extending their stay in negative territory in mid-afternoon trading on Thursday, despite the day's promising weekly employment report. The major averages are all in negative territory, seeing steeper losses in the second half of the day.
This morning, the mood on Wall Street was boosted by a report from the Labor Department showing that first-time claims for unemployment benefits came in lower than expected in the week ended August 1st, offsetting some of the recent concerns about the outlook for the labor market.
Nonetheless, buying interest waned not long after the open, and the major averages pulled back into negative territory. The downturn came as traders cashed in on recent gains ahead of Friday's monthly employment report.
On the earnings front, traders reacted to a mixed bag of quarterly results from Cisco Systems (CSCO), Sunoco (SUN), Comcast (CMCSA, CMCSK), News Corp. (NWS), DirecTV Group (DTV), among others, as earnings season winds to a close.
During the earnings season, a majority of companies were able to beat bottom line estimates via cost cutting measures, but most fell short of revenue estimates as the recession dampened product and service demand in the calendar second quarter.
Traders have also looked to a slew of monthly sales results from retailers such as Target (TGT), Walgreen Co. (WAG), BJ's Wholesale Club (BJ), JC Penney (JCP) and Saks (SKS).
The major averages have moved roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is currently down 59.93 at 9,221.04, the Nasdaq is down 22.94 at 1,970.11 and the S&P 500 is down 9.07 at 993.65.
Most of the Dow components are moving lower, contributing to the moderate loss being shown by the blue chip index.
The Dow is being dragged down by shares of Procter & Gamble (PG), which are down by 4.5 percent in mid-afternoon trading. With the decline, the stock is moving further off the six-month closing high set late last month and has fallen to its worst intraday level in a month.
Alcoa (AA) and JP Morgan Chase (JPM) are also retreating by notable margins, posting losses of 3.9 percent and 3.2 percent, respectively. Both stocks are backing off of their best closing levels in roughly nine months.
Tech giant Hewlett-Packard (HPQ) is down by 2.2 percent, retreating further off of a ten-month high, while Microsoft (MSFT) is sliding by 1.8 percent, stuck in a recent range.
Verizon (VZ), Johnson & Johnson (JNJ) and Chevron (CVX) are also retreating, while American Express (AXP) is bucking the day's downtrend, climbing by 2.7 percent. AmEx reached a ten-month intraday high earlier following an upgrade at Citigroup from Hold to Buy. The broker cited credit stabilization as a reason for the ratings change.
Further, Boeing (BA), General Electric (GE) and United Technologies (UTX) are also rising by substantial margins, helping to limit the losses in the blue chip index.
Airline stocks are continuing to retreat in mid-afternoon trading, dragging the NYSE Arca Airline Index down 2.5 percent. The index is pulling back off the roughly six-month closing high it set on Wednesday.
The index is being dragged down by shares of Alaska Air Group (ALK), which are down by 7.3 percent. With the retreat, the stock is moving off of its best closing level in five months set in the previous session.
Healthcare provider stocks are also continuing their disappointing outing, with the Morgan Stanley Healthcare Provide Index posting a loss of 4.7 percent. The index is pulling back further off the ten-month closing high it set on Monday.
Steel and biotechnology stocks are also surrendering recent gains, with the NYSE Arca Steel Index and the NYSE Arca Biotechnology Index down by 1.7 percent and 1.8 percent, respectively.
On the other hand, retail stocks are bucking the day's downtrend, with S&P Retail Index up by 0.8 percent, helped by trader reaction to the day's slew of retail sale figures. At its highs for the session, the index reached its best intraday level in ten months.
In Focus: Employment Data, Earnings News
As mentioned above, the report from the Labor Department showed that initial jobless claims fell to 550,000 from the previous week's revised figure of 588,000. Economists had been expecting jobless claims to edge down to 580,000 from the 584,000 originally reported for the previous week.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, While the drop in initial claims is welcome, as the pace of firing seems to be slowing, the other data points still point to a difficult hiring environment.
Initial claims though do lead continuing claims and we'll see how long the transition is between a slowdown in firing to a pickup in hiring, he added.
In earnings news, Cisco reported adjusted fourth quarter net income of $0.31 per share, compared to $0.40 per share in the same quarter of last year. Wall Street analysts expected the company to report earnings of $0.29 per share.
Cisco CEO John Chambers also said the company saw a number of positive signs for the economy during the quarter.
Sunoco reported an adjusted second quarter net loss of $0.27 per share, compared to income of $0.52 per share in the year ago quarter. Analysts forecast a loss of $0.12 per share. Revenue for the second quarter fell 51 percent to $7.51 billion from $15.18 billion in the same quarter last year.
Comcast said its second quarter net income was $0.33 per share, compared to $0.21 per share in the prior year quarter. The firm surpassed the expectations of analysts, who forecast earnings of $0.26 per share.
Additionally, Comcast said its revenues for the quarter totaled $8.94 billion, compared to $8.55 billion in the prior year quarter. Twenty analysts had consensus revenue estimate of $8.86 billion for the quarter.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday, although the major markets in Japan and Hong Kong closed notably higher. Japan's benchmark Nikkei 225 Index rose by 1.3 percent, while Hong Kong's Hang Seng Index closed up 2 percent.
Meanwhile, the major European markets closed on the upside by moderate margins. The French CAC 40 Index and the German DAX Index finished up by 0.6 percent and 0.3 percent, respectively, while the U.K.'s FTSE 100 Index ended the day up by 0.9 percent.
In the bond markets, treasuries are seeing strong gains amid the pullback on Wall Street. Subsequently the yield on the benchmark ten-year note is trading at 3.716, posting a loss of 4.8 basis points.
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