Stocks Under Pressure Following Disappointing Economic Data - U.S. Commentary

(RTTNews) - Stocks have moved mostly lower in early trading on Thursday, extending the pullback seen over the course of the previous session. The major averages have slid firmly into negative territory, more than offsetting the strong gains posted on Tuesday.

In recent trading, the major averages have seen some further downside, hitting new lows for the young session. The Dow is down 149.03 points or 0.9 percent at 17,454.84, the Nasdaq is down 42.78 points or 0.8 percent at 5,023.07 and the S&P 500 is down 16.85 points or 0.8 percent at 2,046.51.

The early weakness on Wall Street is partly due to the release of some disappointing U.S. economic data, including a report from the Labor Department 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 has remained relatively subdued, with many traders away from their desks on New Year's Eve.

Airline stocks have shown a significant move to the downside on the day, dragging the NYSE Arca Airline Index down by 1.3 percent. The index is on pace to end the session at its lowest closing level in almost three months.

Software, semiconductor, and utilities stocks are also seeing considerable weakness, while natural gas stocks are bucking the downtrend.

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 have moved to the downside, with the German markets closed for a holiday. While the U.K.'s FTSE 100 Index has fallen by 0.5 percent, the French CAC 40 Index is down by 0.9 percent.

In the bond market, treasuries have moved higher amid the continued weakness on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.2 basis points at 2.271 percent.