Major Averages Pull Back Off Record Closing Highs - U.S. Commentary
10/12/2017 4:17 PM
Extending the lackluster performance seen over the past few sessions, stocks showed a lack of direction during trading on Thursday. The major averages spent much of the day bouncing back and forth across the unchanged line before closing modestly lower.
With the modest drops on the day, the major averages pulled back off yesterday's record closing highs. The Dow edged down 31.88 points or 0.1 percent to 22,842.01, the Nasdaq dipped 12.04 points or 0.2 percent to 6,591.51 and the S&P 500 dipped slipped 4.31 points or 0.2 percent to 2,550.93.
The modestly lower close on Wall Street was partly due to profit taking following the upward trend seen over the past several sessions.
A negative reaction to earnings news from Citigroup (C) and JPMorgan (JPM) also weighed on the markets, with both financial giants moving lower despite reporting better than expected third quarter earnings.
Nonetheless, traders seemed somewhat reluctant to make more significant moves ahead of the release of some key economic data on Friday.
On the U.S. economic front, the Labor Department released a report showing producer prices increased in line with economist estimates in the month of September.
The Labor Department said its producer price index for final demand climbed by 0.4 percent in September after edging up by 0.2 percent in August.
Excluding food and energy prices, core producer prices still rose by 0.4 percent in September after inching up by 0.1 percent in August. Core prices had been expected to rise by 0.2 percent.
A separate Labor Department report showed first-time claims for unemployment benefits fell by more than anticipated in the week ended October 7th.
The report said initial jobless claims dropped to 243,000, a decrease of 15,000 from the previous week's revised level of 258,000. Economists had expected jobless claims to dip to 251,000.
Telecom stocks showed a significant move to the downside over the course of the session, dragging the NYSE Arca Telecom Index down by 2.7 percent. The index pulled back after ending the previous session at a nearly two-month closing high.
AT&T (T) led the telecom sector lower after warning its third quarter results were negatively impacted by recent hurricanes in the U.S. as well as earthquakes in Mexico.
Considerable weakness also emerged among banking stocks, as reflected by the 1.2 percent drop by the Dow Jones Banks Index. A notable decline by Citigroup weighed on the sector.
Oil service stocks also came under pressure amid a decrease by the price of crude oil, while some strength was visible among trucking, tobacco, and railroad stocks.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index climbed by 0.4 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index closed just below the unchanged line, the German DAX Index inched up by 0.1 percent and the U.K.'s FTSE 100 Index rose by 0.3 percent.
In the bond market, treasuries moved modestly higher after a thirty-year bond auction attracted above average demand. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.2 basis points to 2.323 percent.
Economic data may be in focus on Friday, with traders likely to keep an eye on reports on retail sales and consumer price inflation.
On the earnings front, financial giants Bank of America (BAC) and Wells Fargo (WFC) are among the companies due to report their quarterly results before the start of trading.
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