RTTNews - Stocks surrendered early gains and posted moderate losses on Thursday, as traders did some profit taking ahead of key employment data on tap for tomorrow. The major averages all finished in negative territory, further offsetting recent gains.

Initial upside in the equity markets came after a report from the Labor Department showed 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.

The report 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.

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 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 average experienced choppy trading heading into the close, seeing little change after moving off of their worst levels of the day in mid-afternoon trading. The Dow closed down by 24.71 points or 0.3 percent at 9,256.26, the Nasdaq slipped by 19.89 points or 1 percent to 1,973.16, and the S&P 500 fell by 5.64 points or 0.6 percent to 997.08.

Sector News

Healthcare provider stocks turned in some of the day's worst performances, with the Morgan Stanley Healthcare Provider Index posting a loss of 4.8 percent on the day. The index pulled back further off the ten-month closing high it set on Monday.

Airline and biotechnology stocks also fell, although by somewhat more modest margins. The NYSE Arca Airline Index and the NYSE Arca Biotechnology Index closed down by 2.3 percent and 2 percent, respectively.

The airline index retreated from the roughly six-month closing high it set on Wednesday, while the biotechnology index moved further off an historic closing high reached earlier in the week.

Steel, semiconductor, wireless, trucking and electronic storage stocks also surrendered recent gains, while retail stocks bucked the day's downtrend. The S&P Retail Index rose by 1.1 percent, helped by trader reaction to the day's slew of retail sale figures. At its high for the session, the index was at its best intraday level in ten months.

Dow Components

The Dow was dragged down by shares of Procter & Gamble (PG) and Alcoa (AA), which fell by 4.5 percent and 3.6 percent, respectively. With the decline, Procter & Gamble moved further off the six-month closing high set late last month and slipped to its worst closing price in a month. Meanwhile, shares of aluminum producer Alcoa fell away from their best closing level in over nine months.

JP Morgan Chase (JPM) also slid by a substantial margin, recording a loss of 2.5 percent for the session. Shares of the financial giant slipped off of the nine month closing high set on Wednesday.

Further, tech giant Hewlett-Packard (HPQ) dipped by 2.4 percent, backing further off of a ten-month high, while Microsoft (MSFT) fell by 1.5 percent, and remained stuck in a recent range.

Verizon (VZ), Johnson & Johnson (JNJ) and Intel (INTC) also declined, while Boeing (BA) helped to limit the loss by the Dow, posting a gain of 3.4 percent on the session. The advance boosted the stock to its best finish in six weeks.

American Express (AXP) was also one of the leading gainers in the Dow, climbing by 3.1 percent. AmEx reached a ten-month closing high following an upgrade at Citigroup from Hold to Buy. The broker cited credit stabilization as a reason for the ratings change.

Further, General Electric (GE), United Technologies (UTX), DuPont (DD) and Caterpillar (CAT) also posted notable gains, helping to moderate the pullback by the blue chip index.

Other Markets

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 saw modest gains amid the pullback on Wall Street. Subsequently the yield on the benchmark ten-year note, which moves opposite of its price, finished at 3.746 percent, posting a loss of 1.8 basis points.

Looking Ahead

Friday, all eyes will be on the monthly jobs report from the Labor Department. Payrolls for the month of July are expected to fall by 328,000 compared to a decline of 467,000 in June.

Meanwhile, the unemployment rate is expected to edge up to a twenty-six year high of 9.6 percent from 9.5 percent in the previous month. The report is scheduled to be released at 8:30 a.m. ET.

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