After turning lower over the course of the morning, stocks are seeing continued weakness in early afternoon trading on Thursday. The major averages are lingering firmly in negative territory after reaching multi-month intraday highs earlier in the session.

The substantial turnaround by the markets came as traders shrugged off some better than expected employment data, using the initial strength as an opportunity to cash in on some of the strong gains seen in recent sessions.

Lingering uncertainty about the reaction to the official results of the government's financial stress tests as well as the Labor Department's monthly employment report also inspired some traders to do some profit taking.

Technology stocks helped to lead the way lower, with the tech-heavy Nasdaq showing a notable decline after reaching its best intraday level in six months.

The early strength in the markets came after the Labor Department released a report showing an unexpected decrease in initial jobless claims in the week ended May 2.

The report showed that jobless claims fell to 601,000 from the previous week's revised figure of 635,000. Economists had been expecting jobless claims to edge up to 635,000 from the 631,000 originally reported for the previous week.

At the same time, the Labor Department said that continuing claims continued to rise in the week ended April 25, rising to a new record high of 6.351 million from the preceding week's revised level of 6.95 million.

In other news, Federal Reserve Chairman Ben Bernanke spoke earlier in the day, saying that a regulatory structure more focused on the financial system as a whole, rather than individual institutions, is key to ensuring future financial stability.

Speaking at the Chicago Fed's annual Conference on Bank Structure and Competition, Bernanke said, A principal lesson of the crisis is that an approach to supervision that focuses narrowly on individual institutions can miss broader problems that are building up in the system.

Bernanke called for a more macroprudential approach to supervision, looking at the entire financial system as well as individual institutions. In theory, such an approach would mitigate the potential domino effect seen in the current financial crisis.

The major averages have moved roughly sideways in recent trading, stuck well below the unchanged line. The Dow is currently down 71.44 at 8,440.84, the Nasdaq is down 33.40 at 1,725.70 and the S&P 500 is down 6.21 at 913.32.

Sector News

After moving sharply higher on Monday on the heels of better than expected pending home sales data, housing stocks have shown a notable move back to the downside. The Philadelphia Housing Index is currently down 5 percent, pulling back further off Monday's six-month closing high.

M/I Homes (MHO) is turning in one of the sector's worst performances, with the homebuilder currently down 12.9 percent. The loss by M/I Homes comes after it ended the previous session at a seven-month closing high.

Semiconductor stocks are also seeing continued weakness in early afternoon trading, as reflected by the 5.5 percent loss currently being shown by the Philadelphia Semiconductor Index. Micron (MU), Broadcom (BRCM), and Novellus (NVLS) are posting notable losses.

Considerable weakness also remains visible in most other technology-related sectors, with traders cashing in on the recent gains. Computer hardware, networking, and internet stocks are turning in some of the worst performances.

Real estate stocks are also posting steep losses, resulting in a 3.5 percent loss by the Morgan Stanley REIT Index. Airline, telecom, and brokerage stocks are also under pressure.

At the other end of the spectrum, health insurance stocks continue to post standout gains, driving the Morgan Stanley Healthcare Payor Index up 9.5 percent. Cigna (CI) is helping to lead the sector higher, while WellCare (WCG) and Aetna (AET) are also posting strong gains.

Stocks In The News

Among individual stocks, shares of Hot Topic (HOTT) are seeing considerable weakness in early afternoon trading, with the teen apparel retailer currently down 18.1 percent. At its low for the session, Hot Topic was at its worst intraday level in almost two months.

The loss by Hot Topic comes after the company reported a 3.1 percent increase in same store sales in the month of April, coming in well below analyst estimates of 7 percent growth. The weaker than expected growth was partly due to a drop in same stores sales at its Torrid stores.

Shares of Symantec (SYMC) are also under pressure after the security software maker reported a fourth quarter loss versus a year ago profit due in part to a goodwill impairment charge. Symantec is currently posting a 14.8 percent loss.

On the other hand, shares of THQ (THQI) are currently up 23.5 percent after the video game maker reported a wider than expected fourth quarter loss but reported adjusted sales that came in better than analysts had expected.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly higher, with Japan's benchmark Nikkei 225 Index jumping 4.6 percent. Japanese stocks were playing catch up after the market was closed for the three previous sessions.

Meanwhile, the major European markets ended the day mixed after seeing considerable strength earlier in the session. While the U.K.'s FTSE 100 posted a modest gain, the French CAC 40 Index and the German DAX Index fell 1 percent and 1.6 percent, respectively.

In the bond market, treasuries are seeing significant weakness, stuck firmly in negative territory. Subsequently, the yield on the benchmark ten-year note is currently up 9.8 basis points at 3.25 percent after closing nearly flat in the two previous sessions.

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