Stocks Climb Off Worst Levels But Still Close In The Red - U.S. Commentary

(RTTNews) - After showing a notable move to the downside in early trading on Thursday, stocks regained some ground over the course of the session but still closed modestly lower. With the drop on the day, the tech-heavy Nasdaq pulled back off yesterday's record closing high.

The major averages ended the day in negative territory but well off their lows for the session. The Dow slipped 36.87 points or 0.2 percent to 18,126.12, the Nasdaq edged down 8.62 points or 0.2 percent to 5,097.98 and the S&P 500 dipped 2.69 points or 0.1 percent to 2,120.79.

Ongoing uncertainty about the situation in Greece contributed to the early weakness on Wall Street following yesterday's mixed comments regarding the embattled nation's negotiations with its creditors.

Eliminating some of the ambiguity, International Monetary Fund Managing Director Christine Lagarde told a German newspaper it is "very unlikely" a comprehensive solution will be reached in the coming days.

Lagarde also acknowledged that a Greek exit from the eurozone is a "possibility" but said it would "probably not be an end to the euro."

The early downward move also came on the heels of a sell-off in China, as the Shanghai Composite Index plummeted by 6.5 percent.

The weakness was seen as a reaction to announcements by several brokers concerning tightening requirements on margin financing ahead of an IPO influx next week.

A report from the National Association of Realtors showing a jump in pending home sales also weighed on the markets amid continued concerns about the outlook for interest rates.

NAR said its pending home sales index surged up 3.4 percent to 112.4 in April from a slightly upwardly revised 108.7 in March. Economists had expected the index to increase by about 0.8 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the bigger than expected increase, the pending home sales index reached its highest level since hitting 112.5 in May of 2006.

Sector News

Many of the major sectors ended the session well off their worst levels of the day, although significant weakness remained visible among natural gas stocks. The NYSE Arca Natural Gas Index fell by 1.4 percent to its lowest closing level in nearly two months.

The weakness among natural gas stocks came amid a decrease by the price of the associated commodity, with natural gas for July delivery sliding $0.141 to $2.706 per million BTUs.

Railroad stocks also ended the day notably lower, resulting in a 1.3 percent loss by the Dow Jones Railroads Index. With the decrease, the index finished the session at a seven-month closing low.

Steel, airline, and trucking stocks also saw some weakness, although selling pressure waned from earlier in the session.

Meanwhile, gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 1.6 percent. The index bounced off the nearly two-month closing low set in the previous session amid an increase by the price of gold.

Considerable strength was also visible among electronic storage stocks, as reflected by the 1.2 percent gain posted by the NYSE Arca Disk Drive Index. Western Digital (WDC) led the sector higher after being upgraded by Goldman Sachs.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng Index plunged by 2.2 percent.

Most European stocks moved to the downside on the day, although the U.K.'s FTSE 100 Index edged up by 0.1 percent. The German DAX Index and the French CAC 40 Index dropped by 0.8 percent and 0.9 percent, respectively.

In the bond market, treasuries closed nearly flat for the second consecutive session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day down by less than a basis point at 2.13 percent.

Looking Ahead

Trading on Friday may be impacted by the release of some key U.S. economic data, including reports on first quarter GDP, consumer sentiment, and Chicago-area business activity.