RTTNews - After seeing some early strength, stocks have shown a notable move to the downside over the course of morning trading on Thursday. The downturn came as disappointing housing data cooled trader optimism that was bolstered earlier by encouraging labor and manufacturing figures.
While the Commerce Department released a report on Thursday showing a modest increase in new home sales in the month of April, the sales growth came amid a notable downward revision to the pace of sales in March.
The report showed that new homes sales edged up 0.3 percent to an annual rate of 352,000 in April from a revised 351,000 in March. Economists had expected sales to rise to 360,000 from the 356,000 originally reported for the previous month.
Earlier, traders reacted positively to a report from the Labor Department that showed that initial jobless claims came in at 623,000 in the week ended May 23rd. This was down 13,000 from a revised mark of 636,000 in the previous week.
At the same time, continuing claims, which measure the number of people receiving ongoing unemployment help, rose once again and set another record high. The statistic climbed 110,000 to 6.788 million.
Separately, a report from the Commerce Department showed that orders for durable goods increased by much more than expected in the month of April, although the stronger than expected growth came after a steep decline in March.
The report said that durable goods orders jumped 1.9 percent in April following a downwardly revised 2.1 percent decrease in March. Economists had expected orders to edge up 0.5 percent compared to the 0.8 percent drop that had been reported for the previous month.
In other news, General Motors (GM) bondholders reportedly accepted an amended debt-for-equity offer that will help the auto giant restructure. The firm also said that a recent U.S. Treasury proposal provides incentives for GM's unsecured bondholders to support GM's restructuring efforts in the event GM decides to pursue a 363 sale as part of its likely bankruptcy proceeding.
The company said that the implementation of this proposal would result in a New GM with a healthy balance sheet, putting the new company on a clear path toward long-term viability and success.
Meanwhile, Time Warner Inc. (TWX) announced that its Board has authorized management to proceed with plans to spin off its AOL Internet business. Following the proposed transaction, AOL would be an independent, publicly traded company.
In recent trading, the major averages have moved well off their worst levels of the day, although they remain stuck in the red. The Dow is currently down 21.90 at 8,278.12, the Nasdaq is down 4.83 at 1,726.25 and the S&P 500 is down 0.93 at 892.13.
Most of the major sectors have turned lower over the course of the morning, helping to drag the major averages into negative territory.
Housing stocks are leading the way lower, with the Philadelphia Housing Sector Index falling by 3.2 percent. With the decline, the index has dipped to its lowest intraday level in well over a month.
The retreat comes on the heels of the day's disappointing housing data, which has renewed concerns about the near-term prospects for the embattled sector.
Electronic storage, healthcare and transportation stocks have also contributed to the pullback by the major averages on the day.
Mitigating some of the day's losses are gains by resource stocks, with gold stocks posting notable gains and driving the Amex Gold Bugs Index up 3.9 percent. The advance by resource stocks comes amid an increase in most major commodities prices.
Stocks Driven By Analyst Comments
Despite the downturn by the broader markets, shares of CarMax (KMX) are seeing considerable strength after the firm was upgraded to Buy from Hold by Deutsche Bank, which cited a positive outlook in firm funding. Shares of the used car retailer are up by 10.2 percent, moving further off a 2-month low set last Friday.
Allscripts-Misys Healthcare Solutions (MDRX) is also advancing following an upgrade by JP Morgan Chase to Overweight from Neutral. Shares of the medical software provider are up by 4 percent after reaching an 8-month intraday high.
On the other hand, Saks (SKS) fell on the heels of a downgrade by Credit Suisse to Underperform from Neutral. Shares of the luxury apparel retailer are down by 9 percent on the day.
Stocks markets across the Asia-Pacific region turned in a mixed performance on Thursday, although the markets in Hong Kong and mainland China were closed. Japan's benchmark Nikkei 225 Index edged up 0.1 percent.
The major European markets are currently turning in a disappointing performance, deepening their losses. The French CAC 40 Index and the German DAX Index are down by 1.5 and 1.7 percent, respectively, while the U.K.'s FTSE 100 Index is down by 1.5 percent.
In the bond markets, treasuries have ceded some of their earlier gains but remain in firmly positive territory. Subsequently, the yield on the benchmark note is at 3.647 percent, a drop of 4.8 basis points on the day.
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