Stocks Close Modestly Lower Following Choppy Trading Day - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout the trading day on Thursday before ending the session modestly lower. While selling pressure was subdued, the losses on the day still ended the S&P 500's seven-day winning streak.

The major averages moved to the downside going into the close, ending the day in the red. The Dow edged dipped 25.96 points or 0.2 percent to 15,300.63, the Nasdaq edged down 9.04 points or 0.2 percent to 3,715.97 and the S&P 500 slipped 5.71 points or 0.3 percent to 1,683.42.

Profit taking likely contributed to the lower close on Wall Street, with the Dow and the S&P 500 giving back ground after ending the previous session at their best closing levels in almost a month.

The tech-heavy Nasdaq added to the slim loss posted on Wednesday, pulling back further off the nearly thirteen-year closing high set on Tuesday.

Uncertainty about the outcome of next week's Federal Reserve meeting also weighed on the markets, with traders questioning whether or not the central bank will begin scaling back its stimulus program.

The Labor Department's report on weekly jobless claims also did not offer much clarity for the markets, as the report showed that claims unexpectedly dropped to a seven-year low but the data was distorted by technical issues.

The report said initial jobless claims dropped to 292,000 in the week ended September 7th, a decrease of 31,000 from the previous week's unrevised figure of 323,000. The decrease came as a surprise to economists, who had expected jobless claims to climb to 330,000.

With the unexpected decrease, jobless claims fell below 300,000 for the first time since May of 2007 and hit their lowest level since coming in at 291,000 in the week ended April 1, 2006.

However, the Labor Department noted that the drop in jobless claims came as two states failed to report all of their claims while upgrading their computer systems.

"The Labor Day holiday may also [have] had an impact," said Peter Boockvar, chief market analyst at the Lindsey Group. "Therefore, ignore the headline number."

A separate report from the Labor Department showed that U.S. import prices unexpectedly came in unchanged in August, as higher fuel prices were offset by declining non-fuel prices.

Sector News

Gold stocks saw substantial weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 5.7 percent. With the loss, the index fell to its lowest closing level in a month.

The weakness among gold stocks came amid a sharp drop by the price of the precious metal, with gold for December delivery tumbling $33.20 to $1,330.60 an ounce.

Considerable weakness was also visible among railroad stocks, as reflected by the 1.4 percent loss posted by the Dow Jones Railroads Index. The index pulled back off the one-month closing high set on Wednesday.

Steel, tobacco, and airline stocks also came under pressure on the session, while most of the other major sectors ended the day showing more modest moves to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday. Hong Kong's Hang Seng Index edged up by 0.1 percent, while China's Shanghai Composite Index rose by 0.6 percent. Meanwhile, Japan's Nikkei 225 Index bucked the uptrend and fell by 0.3 percent.

Meanwhile, the major European markets turned in a lackluster performance on the day. While the French CAC 40 Index fell by 0.3 percent, the U.K.'s FTSE 100 Index and the German DAX Index both closed nearly unchanged.

In the bond market, treasuries closed modestly higher but well off their best levels of the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 2.907 percent after hitting a low of 2.862 percent.

Looking Ahead

After a relatively quiet week, the economic calendar finally picks up on Friday with the release of key reports on retail sales, producer prices, and consumer sentiment.