U.S. Stocks Climb Well Off Worst Levels But Still Close Lower
(RTTNews) - After moving sharply lower in early trading, stocks showed a significant recovery attempt over the course of the session on Thursday. The major averages climbed well off their worst levels of the day but still ended the day in negative territory.
While the Dow plunged by more than 330 points in early trading, the blue chip index ended the day down just 19.80 points or 0.1 percent to 28,494.20. The Nasdaq fell 54.86 points or 0.5 percent to 11,713.87 and the S&P 500 dipped 5.33 points or 0.2 percent to 3,483.34.
The initial sell-off on Wall Street came amid uncertainty about a new stimulus bill after Treasury Secretary Steven Mnuchin suggested on Wednesday that a new relief package is not likely to pass before next month's elections.
Senate Majority Leader Mitch McConnell has also cast doubts on whether a bill can pass before the elections and recently announced plans to vote on a more limited relief package.
Early selling pressure was also generated in reaction to a Labor Department report showing an unexpected increase in first-time claims for U.S. unemployment benefits in the week ended October 10th.
The report said initial jobless claims climbed to 898,000, an increase of 53,000 from the previous week's revised level of 845,000.
Economists had expected jobless claims to edge down to 825,000 from the 840,000 originally reported for the previous week.
With the unexpected increase, jobless claims reached their highest level since topping 1 million in the week ended August 22nd.
However, stocks rebounded well off their lows after Mnuchin told CNBC's "Squawk Box" that he and President Donald Trump are committed to getting a stimulus deal done.
Mnuchin said he plans to talk to House Speaker Nancy Pelosi today and tell her that he won't let the issue of testing, a key sticking points in talks, stand in the way.
"We'll fundamentally agree with their testing language subject to some minor issues," Mnuchin said. "This issue is being overblown."
Financial stocks helped to lead the recovery attempt by the broader markets, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index climbing by 1.7 percent and 1.6 percent, respectively.
Significant strength also emerged among oil service stocks, as reflected by the 1.6 percent gain posted by the Philadelphia Oil Service Index.
The rebound by oil service stocks came as the price of crude oil bounced well off its early lows, although crude for November delivery still ended the day down $0.08 at $40.96 a barrel.
Meanwhile, considerable weakness remained visible among gold stocks, resulting in a 1.4 percent drop by the NYSE Arca Gold Bugs Index.
The weakness in the gold sector came despite a modest increase by the price of the precious metal, with gold for December delivery inching up $1.60 to $1,908.90.
Pharmaceutical and biotechnology stocks also saw notable weakness on the day, dragging the NYSE Arca Pharmaceutical Index and the NYSE Arca Biotechnology Index down by 1.3 percent and 1.2 percent, respectively.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index fell by 0.5 percent, while Hong Kong's Hang Seng Index tumbled by 2.1 percent.
The major European markets also showed significant moves to the downside on the day. While the German DAX Index plummeted by 2.5 percent, the French CAC 40 Index plunged by 2.1 percent and the U.K.'s FTSE 100 Index slumped by 1.7 percent.
In the bond market, treasuries moved slightly lower over the course of the session after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by nearly a basis point to 0.731 percent after hitting a low of 0.693 percent.
Trading on Friday may be impacted by any developments regarding a new stimulus bill, while reports on retail sales, industrial production and consumer sentiment are also likely to attract some attention.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.