Stocks Give Back Ground But Continue To See Modest Strength - U.S. Commentary

(RTTNews) - After moving to the upside earlier in the session, stocks have given back some ground in recent trading on Thursday. The major averages have pulled back well off their best levels of the day but remain in positive territory.

Currently, the major averages are clinging to modest gains. The Dow is up 26.89 points or 0.2 percent at 16,951.64, the Nasdaq is up 12.69 points or 0.3 percent at 4,795.54 and the S&P 500 is up 3.93 points or 0.2 percent at 1,998.17.

The early strength on Wall Street came on the heels of the release of a slew of U.S. economic data, including a Labor Department report showing an unexpected drop in initial jobless claims.

The report said initial jobless claims fell to 255,000 in the week ended October 10th, matching their lowest level in over forty years. Economists had expected jobless claims to climb to 270,000.

A separate report from the Labor Department said consumer prices fell in line with estimates in the month of September, although the report also showed that core prices rose slightly more than expected.

The Labor Department said its consumer price index slipped by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to dip by 0.2 percent.

Excluding food and energy prices, the core consumer price index rose 0.2 percent in September following a 0.1 percent uptick in August. Core prices had been expected to inch up by another 0.1 percent.

Compared to the same month a year ago, the headline consumer price index was essentially unchanged in September, while the core index was up by 1.9 percent.

Steve Murphy, U.S. Economist at Capital Economics, said, "Overall, there is nothing in this report that would persuade Fed officials to hike interest rates before the end of this year."

"But it will be much harder to leave rates at near-zero next year when possibly both headline and core CPI inflation will be above 2%," he added.

Meanwhile, the New York and Philadelphia Federal Reserves released reports showing continued contractions in regional manufacturing activity in October.

Sector News

Biotechnology stocks continue to turn in a strong performance in mid-day trading, resulting in a 1.5 percent gain by the NYSE Arca Biotechnology Index. The index is rebounding after closing lower in the three previous sessions.

Within the biotech sector, BioMarin Pharmaceutical (BMRN), Seattle Genetics (SGEN), and Agios Pharmaceuticals (AGIO) are posting standout gains.

Considerable strength also remains visible among financial stocks, as reflected by the 1.2 percent gain being posted by the Dow Jones Banks Index. KeyCorp (KEY) and Citigroup (C) are leading the way higher after reporting their quarterly results.

Brokerage, utilities, and pharmaceutical stocks are also seeing some strength on the day, although buying interest has remained somewhat subdued.

On the other hand, computer hardware stocks have come under pressure, dragging the NYSE Arca Computer Hardware Index down by 2.2 percent. Seagate Technology (STX) is posting a steep loss after lowering its first quarter revenue guidance.

Oil service, gold, and natural gas stocks have also moved to the downside on the day, partly offsetting the strength in the aforementioned sectors.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region rebounded following a two-day slide. Japan's Nikkei 225 Index advanced by 1.2 percent, while China's Shanghai Composite Index surged up by 2.3 percent.

The major European markets also showed strong moves back to the upside on the day. While the U.K.'s FTSE 100 Index jumped by 1.1 percent, the French CAC 40 Index and the German DAX Index shot up by 1.4 percent and 1.5 percent, respectively.

In the bond market, treasuries are giving back ground after ending the previous session notably higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.8 basis points at 2.009 percent.