U.S. Stocks Climb Off Worst Levels But Remain Mostly Lower

(RTTNews) - After coming under pressure over the course of the morning, stocks are seeing continued weakness in afternoon trading on Thursday. The major averages have climbed off their worst levels of the day but remain in negative territory.

Currently, the major averages are posting moderate losses. The Dow is down 188.35 points or 0.6 percent at 30,085.52, the Nasdaq is down 29.02 points or 0.3 percent at 11,119.62 and the S&P 500 is down 19.90 points or 0.5 percent at 3,763.38.

The weakness on Wall Street comes as traders continue to express concerns about the outlook for interest rates and the impact higher rates will have on the economy.

A continued rebound by treasury yields is also weighing on the markets, with the yield on the benchmark ten-year note extending the sharp upward move seen on Wednesday.

Traders are also looking ahead to the release of the Labor Department's closely watched monthly employment report on Friday.

Economists currently expect employment to jump by 250,000 jobs in September after surging by 315,000 jobs in August, while the unemployment rate is expected to hold at 3.7 percent.

However, Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics, said, "Any easing of labor market conditions will be welcome by the Fed but won't change the FOMC's plans to continue to raise rates in an effort to bring down inflation."

"The labor market should still be characterized as tight, with the ratio of job openings to unemployed workers still elevated in August despite a small decline," she added.

As the monthly jobs report looms, the Labor Department released a separate report this morning showing first-time claims for U.S. unemployment benefits rebounded by more than expected in the week ended October 1st.

The report said initial jobless claims climbed to 219,000, an increase of 29,000 from the previous week's revised level of 190,000. Economists had expected jobless claims to inch up to 200,000 from the 193,000 originally reported for the previous week.

The revised figure for the previous week reflects the lowest number of jobless claims since the week ended April 23rd.

Sector News

Interest rate-sensitive utilities and commercial real estate stocks continue to turn in some of the market's worst performances, with the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index slumping by 2.6 percent and 2.0 percent, respectively.

Significant weakness is also visible among telecom stocks, as reflected by the 2.0 percent loss being posted by the NYSE Arca North American Telecom Index. The index has fallen to its lowest intraday level in almost two years.

Banking stocks are also seeing considerable weakness on the day, resulting in a 1.4 percent drop by the KBW Bank Index.

Steel, tobacco and pharmaceutical stocks have also moved notably lower, while oil service stocks are extending a recent rally amid an increase by the price of crude oil.

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 advanced by 0.7 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index dipped by 0.4 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both slid by 0.8 percent.

In the bond market, treasuries have climbed off their lows of the session but remain in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.3 basis points at 3.812 percent.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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