Stocks Close Mostly Lower Following Recent Strength - U.S. Commentary

(RTTNews) - After moving sharply higher over the three previous sessions, stocks gave back some ground over the course of the trading day on Thursday. Some traders stayed on the sidelines following recent volatility, however, leading to relatively choppy trading.

The major averages climbed off their worst levels going into the close but still ended the day in the red. The Dow dipped 40.40 points or 0.3 percent to 16,413.43, the Nasdaq slumped 46.53 points or 1 percent to 4,487.54 and the S&P 500 fell 8.99 points or 0.5 percent to 1,917.83.

The weakness that emerged on Wall Street was partly due to a pullback by the price of crude oil, which nearly offset the strength seen earlier in the day.

Crude for March delivery ended the day up by just $0.11 at $30.77 a barrel after reaching as high as $31.98 a barrel in early trading. The more actively trade April futures closed slightly lower.

The price of crude oil came under pressure following the release of a report from the Energy Information Administration showing that crude oil inventories rose by 2.1 million barrels last week.

While the increase was smaller than expected, the data contradicted an earlier report from the American Petroleum Institute showing that crude oil inventories fell by 3.3 million barrels.

A notable decrease by shares of Wal-Mart (WMT) also weighed on the markets, with the retail giant slumping by 3 percent.

Wal-Mart came under pressure after reporting fourth quarter earnings that beat analyst estimates but on weaker than expected revenues. The company also lowered its full-year revenue guidance due to the strength of the U.S. dollar.

Traders were also digesting some mixed U.S. economic data, including a Labor Department report showing an unexpected drop in weekly jobless claims.

The report said initial jobless claims fell to 262,000 in the week ended February 13th from the previous week's unrevised level of 269,000. The drop surprised economists, who had expected jobless claims to rise to 275,000.

Meanwhile, a separate report from the Philadelphia Federal Reserve showed a continued contraction in regional manufacturing activity in the month of February.

The Philly Fed said the diffusion index for current activity rose to a negative 2.8 in February from a negative 3.5 in January, but a negative reading indicates continued weakness in business conditions.

The Conference Board also released a report showing a second straight monthly decrease by its index of leading U.S. economic indicators.

Sector News

After helping to lead the markets higher over the past few sessions, energy stocks showed a significant move back to the downside on the day.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index tumbled by 2.8 percent, and the NYSE Arca Oil & Gas Index slumped by 1.7 percent.

Within the sector, Ultra Petroleum (UPL) posted a particularly steep loss after reporting weaker than expected fourth quarter results.

Steel stocks also gave back ground following recent strength, dragging the NYSE Arca Steel Index down by 2.2 percent. The pullback by the index came after it ended the previous session at its best closing level in over a month.

Biotechnology, banking, railroad and retail stocks also came under pressure on the day, while significant strength was visible among gold, airline, and computer hardware stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both surged up by 2.3 percent. However, China's Shanghai Composite Index bucked the uptrend and dipped by 0.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index dropped by 1 percent, the French CAC 40 Index inched up by 0.2 percent and the German DAX Index advanced by 0.9 percent.

In the bond market, treasuries regained some ground after pulling back sharply over the past few days. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6 basis points to 1.759 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to the Labor Department's report on consumer price inflation in the month of January.