Stocks Fall Sharply As Overseas Worries Overshadow Upbeat Data - U.S. Commentary

(RTTNews) - Stocks moved substantially lower over the course of the trading day on Thursday, as early buying interest quickly faded. The sharp pullback on the day came as lingering overseas concerns overshadowed some upbeat U.S. economic data.

The major averages climbed off their worst levels going into the close but remained firmly in the red. The Dow plunged 231.19 points or 1.4 percent to 16,108.89, the Nasdaq plummeted 62.91 points or 1.5 percent to 4,260.42 and the S&P 500 tumbled 21.86 points or 1.2 percent to 1,846.34.

The initial strength on Wall Street came following the release of a report from the Commerce Department showing stronger than expected retail sales growth.

The report said retail sales rose by 0.3 percent in February following a revised 0.6 percent drop in January. Economists had expected sales to edge up by 0.2 percent.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "It's of some comfort that sales rose in February after falling in both December and January. But if the bad weather was no longer an issue, sales would have rebounded much more rapidly."

The Labor Department also released a report showing an unexpected decrease in initial jobless claims in the week ended March 8th.

While the data generated some early buying interest, traders seemed reluctant to continue pushing stocks higher amid uncertainty about the strength of the economic recovery following some weather-induced softness.

The subsequent pullback by the markets reflected lingering concerns about Chinese economic growth and escalating tensions in Ukraine.

A New York Times report indicating that Russia military forces are conducting operations in several regions near the Ukrainian border added to the selling pressure.

The Times noted that the operations came as Ukraine's acting president Oleksandr Turchynov issued a statement saying he believes Russian forces massed near the border are "ready to intervene in Ukraine at anytime."

Sector News

Most of the major sectors came under pressure over the course of the session, contributing to the steep drop by the broader markets.

Networking stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Networking Index down by 2.6 percent. With the loss, the index ended the session at its worst closing level in over a month.

Within the networking sector, Infinera (INFN), Alcatel-Lucent (ALU) and Adtran (ADTN) posted particularly steep losses.

Substantial weakness also emerged among biotechnology stocks, as reflected by the 2.3 percent loss posted by the NYSE Arca Biotechnology Index. (ILMN) helped to lead the sector lower, tumbling by 5.7 percent.

Housing, semiconductor, and steel stocks also saw considerable weakness on the day, reflecting the broad based selling pressure on Wall Street.

Meanwhile, gold stocks were among the few groups to buck the downtrend, with the NYSE Arca Gold Bugs Index jumping by 3.1 percent. The strength in the sector came amid a modest increase by the price of gold.

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 edged down by 0.1 percent, while China's Shanghai Composite Index advanced by 1.1 percent.

Meanwhile, the major European markets all showed notable moves to the downside on the day. While the German DAX Index dropped by 1.9 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index fell by 1.3 percent and 1 percent, respectively.

In the bond market, treasuries moved sharply higher over the course of the trading session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.3 basis points to 2.653 percent.

Looking Ahead

While traders are likely to keep an eye on developments overseas, trading on Friday could also be impacted by the release of reports on producer prices and consumer sentiment.