Stocks Giving Back Ground Following Yesterday's Rally - U.S. Commentary

(RTTNews) - Stocks have moved moderately lower in early trading on Thursday, giving back some ground after closing higher for three straight days. The major averages have all slid into negative territory, although selling pressure has remained relatively subdued.

Currently, the major averages remain in the red. The Dow is down 78.44 points or 0.4 percent at 17,670.65, the Nasdaq is down 6.85 points or 0.1 percent at 5,064.28 and the S&P 500 is down 11.35 points or 0.5 percent at 2,061.72.

The weakness that has emerged on Wall Street may partly reflect profit taking following yesterday's rally, which came after the Federal Reserve's monetary policy decision.

The Fed's decision to raise interest rates by a quarter point was widely expected, and the central bank seemed to convince traders any further rate hikes will be gradual.

A decrease by the price of crude oil is weighing on the markets, with crude for January delivery sliding $0.58 to $34.94 a barrel after tumbling $1.83 to a new six-year closing low of $35.52 a barrel on Wednesday.

The continued drop by the price of oil is contributing to significant weakness among energy stocks, which bucked the uptrend seen in the previous session.

Gold stocks are also seeing substantial weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 6 percent. The weakness in the sector comes as gold for February delivery is plunging $22.70 to $1,054.10 an ounce.

Steel, railroad, and telecom stocks are also seeing notable weakness, while most of the major sectors are showing more modest moves.

On the economic front, the Labor Department released a report before the start of trading showing a bigger than expected pullback in initial jobless claims in the week ended December 12th.

The report said initial jobless claims fell to 271,000, a decrease of 11,000 from the previous week's unrevised level of 282,000. Economists had expected jobless claims to pull back to 275,000.

The Conference Board also released a report showing that its leading economic indicators index rose by 0.4 percent in November, exceeding economist estimates for a 0.2 percent increase.

Meanwhile, a separate report from the Philadelphia Federal Reserve showed an unexpected contraction in regional manufacturing activity in December.

The Philly Fed said its diffusion index for current activity fell to a negative 5.9 in December from a positive 1.9 in November, with a negative reading indicating a contraction. Economists had expected the index to edge down to a positive 1.2.

In overseas trading, most stock markets across the Asia-Pacific region saw considerable strength during trading on Thursday. Japan's Nikkei 225 Index shot up by 1.6 percent, while China's Shanghai Composite Index jumped by 1.8 percent.

The major European markets have also shown strong moves to the upside on the day. While the German DAX Index is up by 3 percent, the French CAC 40 Index is up by 1.8 percent and the U.K.'s FTSE 100 Index is up by 1 percent.

In the bond market, treasuries are regaining some ground after moving lower over the past three sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.2 basis points at 2.255 percent.