Stocks Close Mostly Lower On The Day, Mixed For The Year - U.S. Commentary

(RTTNews) - While trading activity was relatively light on the last day of the year, stocks moved mostly lower over the course of the trading day on Thursday. The drop on the day extended the pullback that was seen in the previous session.

The major averages accelerated to the downside going into the close, ending the day just off their lows for the session. The Dow slumped 178.84 points or 1 percent to 17,425.03, the Nasdaq plunged 58.44 points or 1.2 percent to 5,007.41 and the S&P 500 dove 19.42 points or 0.9 percent to 2,043.94.

With the losses on the day, the major averages all moved lower for the holiday-shortened week. The Dow dropped by 0.7 percent, while the Nasdaq and the S&P 500 both fell by 0.8 percent.

However, the major averages turned in a mixed performance for the year, as the Nasdaq surged up by 5.7 percent but the Dow tumbled by 2.2 percent and the S&P 500 slid by 0.7 percent.

The lower close on Wall Street on Thursday was partly in reaction to the release of some disappointing U.S. economic data.

Before the start of trading, the Labor Department released a report showing a bigger than expected increase in initial jobless claims in the week ended December 26th.

The report said initial jobless claims climbed to 287,000, an increase of 20,000 from the previous week's unrevised level of 267,000. Economists had expected jobless claims to edge up to 270,000.

With the bigger than expected increase, jobless claims rose to their highest level since hitting 296,000 in the week ended July 4th.

A separate report from MNI Indicators said Chicago-area business activity unexpectedly contracted at a faster pace in December.

MNI Indicators said its Chicago business barometer dropped to 42.9 in December from 48.7 in November, with a reading below 50 indicating a contraction in activity.

The decrease by the business barometer came as a surprise to economists, who had expected the index to climb to 50.0. The unexpected drop pulled the barometer down to its lowest level since July of 2009.

Nonetheless, trading activity was relatively subdued, with many traders away from their desks on New Year's Eve.

Sector News

Semiconductor stocks saw significant weakness on the day, with the Philadelphia Semiconductor Index sliding by 1.4 percent. Skyworks Solutions (SWKS) and ASML (ASML) turned in two of the sector's worst performances.

Software and computer hardware stocks also came under pressure, dragging both the Dow Jones Software Index and the NYSE Arca Computer Hardware Index down by 1.3 percent.

Considerable weakness was also visible among utilities stocks, as reflected by the 1.1 percent loss posted by the Dow Jones Utilities Average. With the drop, the average pulled back further off the two-month closing high set on Tuesday.

Pharmaceutical, retail, and internet stocks also saw notable weakness on the day, while natural gas stocks bucked the downtrend amid an increase by the price of natural gas.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday, although the Japanese markets were closed on the day. Hong Kong's Hang Seng Index edged up by 0.2 percent, while Australia's All Ordinaries Index dipped by 0.4 percent.

Meanwhile, the major European markets moved to the downside, with the German markets closed for a holiday. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the French CAC 40 Index dropped by 0.9 percent.

In the bond market, treasuries fluctuated over the course of the session but managed to close higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 3.4 basis points to 2.269 percent.

Looking Ahead

Following the long holiday weekend, trading activity is likely to return to normal next week amid the release of several key U.S. economic reports.

The monthly jobs report due next Friday may be in the spotlight, although traders are also likely to keep an eye on reports on manufacturing and service sector activity, the trade deficit and factory orders.

The Federal Reserve is also scheduled to release the minutes of its most recent monetary policy meeting, when the central bank decided to raise interest rates for the first time in nearly a decade.