RTTNews - Following a considerable drop off at the opening bell, stocks are continuing to tread in negative territory in mid-afternoon trading on Thursday. The major averages continue to hover near their worst levels of the day as trader optimism dampened following the release of largely disappointing economic data.

A report from the U.S. Labor Department for the week ended May 16th showed that first time jobless claims slowed, but continuing claims rose for yet another week, reaching a new historic high. The data continued to fuel concern about a labor sector that continues to see considerable losses on a weekly basis.

Meanwhile, the Philadelphia Federal Reserve's business activity index for the first half of May improved by less than expected, further dampening risk appetite.

Moderating some of the pessimism were forward-looking indicators for April from the Conference Board. The index of leading economic indicators came in slightly better than expected, raising some near-term economic prospects.

The broad-based losses on the day have come as traders are doing 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, some investors may be looking to trim their positions in riskier investments such as stocks.

The major averages are firmly entrenched in negative territory, testing their lows for the session in recent trading. The Dow is currently down by 193.70 to 8228.34, the Nasdaq is down 47.84 to 1680.00, and the S&P 500 is down by 22.78 to 880.69.

Dow Components

Most Dow components are posting considerable losses on the day, contributing to the triple digit downfall seen by the blue chip index in mid-afternoon trading.

The Dow is being driven lower by shares of Alcoa (AA) and Caterpillar (CAT), which are down by 5.9 and 4.7 percent, respectively, giving back recent gains.

Meanwhile, Home Depot (HD) is also one of the day's worst performers, falling by 4.8 percent. With the decline, shares of the home improvement retailer have fallen to their lowest level since late March.

The Dow's pullback is being mitigated by shares of General Motors (GM), one of the two components posting gains on the day. Shares of the auto giant are up by 15.1 percent. With the move, the stock is extending its recent gains, moving further away from a low of $1.00 posted earlier this month, its lowest level since the Great Depression.

Meanwhile, shares of Wal-Mart have also shown signs of life, seeing a mild climb of 0.1 percent on the day.

Sector News

Most major sectors continue to linger in the red in mid-afternoon trading, contributing to the major retreat by the major averages on the day.

Significant weakness has continued in railroad stocks, with the Dow Jones Railroads Index down by 5.4 percent on the day. Notable losses continue to be visible in oil service and gas stocks prompted by the pullback in respective commodity futures on the day.

Steel stocks are also showing weakness, as reflected by the 5.7 percent retreat in the Amex Steel Index. With the decline, the index is pulling away from its best intraday level of the year posted in the previous session.

The day's losses continue to be moderated by some technology stocks, with strength visible in the Amex Disk Drive Index, which is up by 2.4 percent on the session. Some gold stocks have also shown gains in mid-afternoon trading, extending their recent run up.

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.

On the earnings front, tax preparation and financial management software maker Intuit Inc. (INTU) reported its third quarter results after Wednesday's close. The company reported adjusted third quarter net income of $552.3 million or $1.68 per share, which beat out Wall Street estimates of $1.61 per share.

The firm also said revenue jumped 9 percent compared to the same period last year. Shares climbed after the report, up by 7.8 percent in mid-afternoon trading.

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.

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.

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