U.S. Stocks Move Modestly Higher After Seeing Early Weakness
After moving modestly lower early in the session, stocks have shown a notable turnaround over the course of the trading day on Thursday. The major averages have climbed well off their worst levels of the day and into positive territory.
Currently, the major averages are holding on to slim gains. The Dow is up 64.69 points or 0.2 percent at 35,347.21, the Nasdaq is up 50.48 points or 0.4 percent at 14,023.93 and the S&P 500 is up 5.68 points or 0.1 percent at 4,519.07.
The early weakness on Wall Street partly reflected continued concerns about U.S. debt after credit rating agency Fitch Ratings unexpectedly downgraded the United States’ credit rating on Tuesday.
Fitch downgraded the U.S.’ long-term foreign-currency issuer default rating to AA+ from AAA, citing a “steady deterioration in standards of governance over the last 20 years.”
“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch said.
Selling pressure remained somewhat subdued, however, as traders seemed reluctant to make significant moves ahead of the release of the closely watched monthly jobs report on Friday.
Some traders subsequently took the opportunity to pick up stocks at relatively reduced levels following the sell-off seen on Wednesday.
On the U.S. economic front, a report released by the Labor Department showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended July 29th.
The Labor Department said initial jobless claims crept up to 227,000, an increase of 6,000 from the previous week’s unrevised level of 221,000. The uptick in jobless claims matched economist estimates.
The Institute for Supply Management also released a report showing a modest slowdown in the pace of growth in U.S. service sector activity in the month of July.
The ISM said its services PMI slipped to 52.7 in July from 53.9 in June, although a reading above 50 still indicates growth. Economists had expected the index to edge down to 53.0.
Sector News
Energy stocks have moved sharply higher over the course of the session, benefiting from a surge by the price of crude oil.
With crude for September delivery spiking $2.16 to $85.23 a barrel, the Philadelphia Oil Service Index is up by 2.0 percent and the NYSE Arca Oil Index is up by 1.7 percent.
A significant increase by the price of natural gas is also contributing to strength among natural gas stocks with the NYSE Arca Natural Gas Index jumping by 1.8 percent.
Computer hardware, banking and retail stocks have also moved to the upside over the course of the session, while considerable weakness remains visible among interest rate sensitive utilities and commercial real estate stocks.
Airline stocks also continue to see substantial weakness, dragging the NYSE Arca Airline Index down by 2.4 percent to its lowest intraday level in almost two months.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index dove by 1.7 percent, while Hong Kong’s Hang Seng Index fell by 0.5 percent.
The major European markets also moved to the downside on the day. While the U.K.’s FTSE 100 Index declined by 0.4 percent, the French CAC 40 Index and the German DAX Index slid by 0.7 percent and 0.8 percent, respectively.
In the bond market, treasuries have moved sharply lower, extending the downward move seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 10.7 basis points at 4.185 percent.
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