Stocks Close Mostly Lower Ahead Of Monthly Jobs Report - U.S. Commentary

(RTTNews) - After trending higher over the past few sessions, stocks gave back some ground over the course of the trading day on Thursday. Selling pressure remained relatively subdued, however, limiting the downside for the markets.

The major averages all closed in the red, but the Nasdaq underperformed its counterparts by a wide margin. The Nasdaq tumbled 38.72 points or 0.9 percent to 4,237.74, while the Dow edged down 0.45 points or less than a tenth of a percent to 16,572.55 and the S&P 500 dipped 2.13 points or 0.1 percent to 1,888.77.

Profit taking contributed to the weakness on Wall Street after both the Dow and the S&P 500 hit record intraday highs early in the session.

Traders also seemed to be looking for safer bets than stocks ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

Before the start of trading, the Labor Department released a report showing a bigger than expected increase in weekly jobless claims.

The Labor Department said initial jobless claims climbed to 326,000 in the week ended March 29th, an increase of 16,000 from the previous week's revised figure of 310,000. Economists had expected jobless claims to rise to 320,000.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Notwithstanding the higher than expected figure, claims have encouragingly been on a downward path over the past 5 weeks as the weather obviously improved."

A separate report from the Commerce Department showed that the U.S. trade deficit unexpectedly widened in the month of February amid an increase in imports and a drop in exports.

The Commerce Department said the trade deficit widened to $42.3 billion in February from a revised $39.3 billion in January. The trade deficit had been expected to narrow to $38.5 billion.

Meanwhile, the Institute for Supply Management released a report showing that U.S. service sector activity expanded at a faster rate in March, although the index of activity in the sector rose by less than economists had expected.

The ISM said its non-manufacturing index climbed to 53.1 in March from 51.6 in February. A reading above 50 indicates continued growth in the service sector, but economists had been expecting the index to reach a reading of 53.5.

Sector News

After regaining some ground over the past few sessions, biotechnology stocks showed a substantial move back to the downside. The NYSE Arca Biotechnology Index plunged by 2.9 percent but remained above the nearly two-month closing low set last Friday.

Exact Sciences (EXAS) turned in one of the biotech sector's worst performances, with molecular diagnostics company tumbling by 9.3 percent after announcing a proposed public offering of $125 million worth of its common stock.

Brokerage stocks also came under considerable selling pressure, dragging the NYSE Arca Broker/Dealer Index down by 2.2 percent. Online brokers E*Trade (ETFC) and TD Ameritrade (AMTD) posted steep losses on the day.

Significant weakness was also visible among software and electronic storage stocks, contributing to the sharp drop by the tech-heavy Nasdaq.

Meanwhile, natural gas and oil stocks saw notable strength on the day, with the NYSE Arca Natural Gas Index and the NYSE Arca Oil Index rising by 1.9 percent and 1.6 percent, respectively. The strength in the sectors came amid increases in the prices of the associated commodities.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index advanced by 0.8 percent, while China's Shanghai Composite Index dropped by 0.7 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index edged down by 0.2 percent, the French CAC 40 Index rose by 0.4 percent and the German DAX Index inched up by 0.1 percent.

In the bond market, treasuries moved modestly higher after trending lower over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.3 basis points to 2.79 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the jobs report. Economists expect employment to increase by about 200,000 jobs in March following the addition of 175,000 jobs in February.