RTTNews - After mild losses in the previous session, stocks finished Thursday's session significantly lower. The major averages all closed in firmly negative territory as trader optimism dampened following the release of largely disappointing economic data.

The retreat came on the heels of another uninspiring jobs report from the U.S Labor Department for the week ended May 16th. The data showed that first time jobless claims slowed but continuing claims rose for yet another week, reaching a new historic high.

Meanwhile, the Philadelphia Federal Reserve's business activity index for the first half of May showed improvement but rose by less than expected, further mitigating risk appetite.

Some of the pessimism was moderated by forward looking indicators for April from the Conference Board, which came in slightly better than expected, raising some economic prospects for the coming months.

The broad-based losses on the day came as traders did some profit taking following the recent run-up seen in equities. In addition, with no considerable news on tap for Friday's session and markets closed on Monday for Memorial Day, equity markets worldwide saw considerable pullbacks.

The major averages opened notably lower following the jobs report and lingered in negative territory throughout the day, before finishing just off of their daily lows. Subsequently, the Dow closed down by 129.91 at 8292.13, the Nasdaq finished down by 32.59 at 1695.25, and the S&P 500 also fell, closing down by 15.14 at 888.33.

Sector News

Most major sectors finished lower on the day, contributing to the notable retreat by the major indices.

Steel stocks turned in some of the day's worst performances, as reflected by the 4.5 percent downturn in the Amex Steel Index. With the decline, the index pulled away from its best intraday level of the year, posted in the previous session.

Significant weakness was also present in railroad stocks, with the Dow Jones Railroad Index falling by 4.5 percent on the day.

Oil service and gas stocks also fell, prompted by the pullback in respective commodity futures on the day.

The day's losses were moderated by some gains in technology stocks, with the Amex Disk Drive Index rising by 4.1 percent on the session. Some gold stocks also advanced on the day in tandem with the run-up in gold futures on the NYMEX.

Dow Components

Most Dow components posted notable losses on the day, contributing to the triple digit drop seen by the blue chip index.

The Dow was driven lower by shares of Alcoa (AA) and Caterpillar (CAT), which fell by 4.1 and 4.7 percent, respectively, giving back recent gains.

Meanwhile, Home Depot (HD) was also one of the day's worst performers, falling by 3.9 percent. With the decline, shares of the home improvement retailer have dropped to their lowest levels since late March.

The pullback in the blue chip index was slowed by shares of General Motors (GM), one of the seven Dow components to post gains on the day. Shares of the auto giant closed up by 32.4 percent. With the day's climb, the stock added to its recent gains, moving further away from a low of $1.00 posted earlier this month, the lowest level since the Great Depression.

The move came as the United Automotive Workers union reached an agreement with General Motors over employee compensation this morning, which will make it easier for the auto icon to restructure.

Meanwhile, shares of JP Morgan Chase (JPM), Citigroup (C) and American Express (AXP) showed signs of life in late session trading, helping the Dow to close away from its worst levels of the day.

In Focus: Economic Data, Earnings, Corporate News

Earlier this morning, investors were presented with a report from the U.S. Labor Department that showed initial jobless claims came in at 631,000 for the week ended May 16th. This was down 12,000 from the previous week's revised total of 643,000.

The number of people receiving ongoing unemployment help, a figure known as continuing claims, rose again in the latest statistics. Continuing claims climbed to 6.662 million - yet another record high.

Traders also digested data on forward looking economic indicators from the Conference Board which rose to 1.0 percent for April, compared to a decline of 0.3 percent in March. The data came in slightly above analyst expectations, who had forecasted a rise of 0.8 percent.

The figure was boosted by the recent rise in consumer outlook and rallies in the stock market, while being dragged down by the recent retreat in housing starts data.

Separately, the Philadelphia arm of the Federal Reserve released its business activity index for the first half of May, showing a reading of negative 22.6 compared to a negative 24.4 reported for the second half of April. The result came in worse than expected, after analysts had estimated the index to come in at a negative 18.0.

In other Fed news, the Federal Reserve completed its latest quantitative easing move this morning, buying back more long-term securities.

The New York arm of the Federal Reserve purchased $7.4 billion worth of securities with maturity dates ranging from September of 2013 to February of 2016. The day's buyback saw a total of $45.69 billion in treasuries submitted for repurchase.

With the buyback, the government has bought back $122.98 billion in treasuries since the program began on March 25th.

In corporate news, media reports said that auto and home lender GMAC LLC, which was bailed out by the government in December, is expected to receive more than $7 billion in U.S. Treasury funds to provide financing for customers of General Motors Corp. (GM) and Chrysler LLC.

On the earnings front Gap Inc. (GPS) reported first-quarter earnings after the closing bell on Thursday. The firm announced net income of $215 million or $0.31 per share, compared to $249 million or $0.34 per share in the same quarter last year.

On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.30 per share for the quarter. Analysts' estimates typically exclude special items. The stock rose following the report, climbing by 1.3 percent in after hours trading.

Earlier today, Standard & Poor's revised its outlook on the U.K. to negative from stable, assuming that general government debt burden would reach 100 percent of GDP. The rating agency reaffirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings.

Credit analyst at S&P, David Beers said The rating could be lowered if we conclude that, following the election, the next government's fiscal consolidation plans are unlikely to put the U.K. debt burden on a secure downward trajectory over the medium term.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished lower on Thursday. Japan's benchmark Nikkei 225 Index slipped by 0.8 percent and Hong Kong's Hang Seng Index fell 1.5 percent.

Meanwhile, the major European markets closed firmly on the downside. The French CAC 40 Index and the German DAX Index both fell considerably on the day, dropping by 2.6 and 2.7 percent, respectively. The U.K.'s FTSE 100 Index also finished lower, closing down by 2.7 percent.

In the bond markets, treasuries plunged on the day, closing just off of their worst levels of the day. Subsequently, the yield on the benchmark ten-year note closed at 3.353 percent, a jump of 15.1 basis points on the day.

Looking Ahead

Trading may be subdued on Friday with no significant news on tap for the day. Traders may look to cash in further on recent gains ahead of the long weekend, with the markets closed on Monday due to the Memorial Day holiday.

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