Disappointing Jobs Data Contributes To Early Pullback On Wall Street

Stocks have moved mostly lower in morning trading on Thursday, giving back ground after moving sharply higher over the two previous sessions. The Dow and the S&P 500 are pulling back off yesterday’s more than one-month closing highs.

The major averages are currently all in negative territory, although the tech-heavy Nasdaq is posting a particularly steep loss. While the Nasdaq is down 136.51 points or 1.3 percent at 10,413.98, the Dow is down 61.26 points or 0.2 percent at 26,808.84 and the S&P 500 is down 17.79 points or 0.6 percent at 3,208.77.

The pullback on Wall Street comes following the release of a report from the Labor Department showing the decline in first-time claims for unemployment benefits nearly ground to a halt last week.

The Labor Department said initial jobless claims slipped to 1.300 million in the week ended July 11th, a decrease of just 10,000 from the previous week’s revised level 1.310 million.

Economists had expected jobless claims to drop to 1.250 million from the 1.314 million originally reported for the previous week.

Jobless claims fell for the fifteenth consecutive week, although the pace of decline has slowed considerably from April and May.

The negative sentiment was partly offset by a report from the Commerce Department showing another substantial increase in retail sales in the month of June, although the data may be seen as old news as some states roll back their reopening plans due to a surge in coronavirus cases.

The report said retail sales soared by 7.5 percent in June after skyrocketing by an upwardly revised 18.2 percent in May.

Economists had expected retail sales to jump by 5.0 percent compared to the 17.7 percent spike originally reported for the previous month.

Excluding sales by motor vehicles and parts dealers, retail sales still shot up by 7.3 percent in May after soaring by 12.1 percent in May. Ex-auto sales were also expected to surge up by 5.0 percent.

A separate report from the National Association of Home Builders showed another substantial improvement in homebuilder confidence in the month of July.

The report said the NAHB/Wells Fargo Housing Market Index surged up to 72 in July after skyrocketing to 58 in June. Economists had expected the index to inch up to 60.

With the much bigger than expected jump, the NAHB noted the index now stands at the solid pre-pandemic reading in March before the coronavirus outbreak affected much of the nation.

A steep drop by Bank of America (BAC) is also weighing on the markets, with the financial giant tumbling by 2.6 percent.

Bank of America has come under pressure after reporting better than expected second quarter earnings but also setting aside another $4 billion for coronavirus-related loan losses.

Healthcare giant Johnson & Johnson (JNJ) is also seeing some weakness despite reporting second quarter results that exceeded analyst estimates and raising its full-year guidance.

On the other hand, shares of Morgan Stanley (MS) have moved to the upside after the investment firm reported better than expected second quarter results.

Airline stocks are pulling back sharply after turning in some of the best performances in the previous session, with the NYSE Arca Airline Index plunging by 2.7 percent. The index soared by 8.7 percent on Wednesday.

Considerable weakness is also visible among oil service stocks, as reflected by the 2 percent slump by the Philadelphia Oil Service Index.

The pullback by oil service stocks comes as the price of crude oil for August delivery is falling $0.31 to $40.89 a barrel after jumping $0.91 to $41.20 a barrel in the previous session.

Software, semiconductor, and biotechnology stocks have also come under pressure, contributing to the steep drop by the tech-heavy Nasdaq.

Meanwhile, computer hardware stocks have shown a strong move to the upside, driving the NYSE Arca Computer Hardware Index up by 2 percent. The index has reached its best intraday level in over a month.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slid by 0.8 percent, while China’s Shanghai Composite Index plunged by 4.5 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has fallen by 0.5 percent, the German DAX Index and the French CAC 40 Index are both down by 0.4 percent.

In the bond market, treasuries have moved higher following the modest drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.5 basis points at 0.605 percent.

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