U.S. Stocks Remain Sharply Lower After Early Sell-Off

After moving sharply lower early in the session, stocks continue to see significant weakness in afternoon trading on Thursday. With the steep drop on the day, the major averages are extending the downward trend seen over the past several sessions.

Currently, the major averages are off their worst levels of the day but still firmly negative. The Dow is down 463.20 points or 1.5 percent at 30,309.59, the Nasdaq is down 141.81 points or 1.3 percent at 11,105.78 and the S&P 500 is down 55.76 points or 1.5 percent at 3,746.02.

The continued weakness on Wall Street partly reflects disappointing earnings news from financial giants JPMorgan Chase (JPM) and Morgan Stanley (MS).

JPMorgan is down by 4.5 percent and Morgan Stanley is down by 1.3 percent after both companies reported second quarter earnings that missed analyst estimates.

Concerns about inflation and higher interest rates also continue to weigh on the markets after the Labor Department released a report showing U.S. producer prices increased by more than expected in the month of June.

The Labor Department said its producer price index for final demand jumped by 1.1 percent in June after climbing by an upwardly revised 0.9 percent in May.

Economists had expected producer prices to increase by 0.8 percent, matching the advance originally reported for the previous month.

The annual rate of producer price growth accelerated to 11.3 percent in June, reflecting the largest spike since a record 11.6 percent jump in March.

Economists had expected the annual rate of producer price growth to slow to 10.7 percent in June from 10.9 percent in May.

The Labor Department released a separate report on Wednesday showing U.S. consumer prices also surged by more than expected in the month of June.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly inched higher in the week ended July 9th.

The report showed initial jobless claims crept up to 244,000, an increase of 9,000 from the previous week’s unrevised level of 235,000. The uptick surprised economists, who had expected jobless claims to come in unchanged.

Sector News

Gold stocks continue to see substantial weakness in afternoon trading, dragging the NYSE Arca Gold Bugs Index down by 5.7 percent to its lowest intraday level in over two years.

The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, with gold for August delivery tumbling $31.40 to $1,704.10 an ounce.

Substantial weakness also remains visible among energy stocks, which have moved notably lower along with the price of crude oil. Crude for August delivery has climbed off its worst levels but remains down $1.60 at $94.70 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 5.6 percent, the NYSE Arca Oil Index is down by 4.4 percent and the NYSE Arca Natural Gas Index is down by 3 percent.

Steel stocks also continue to see significant weakness on the day, resulting in a 5.2 percent nosedive by the NYSE Arca Steel Index. The index has fallen to its lowest intraday level in over a year.

Banking, chemical, and biotechnology stocks have also shown notable moves to the downside amid broad based weakness on Wall Street.

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 climbed by 0.6 percent, while Hong Kong’s Hang Seng Index dipped by 0.2 percent.

Meanwhile, the major European markets all showed significant moves to the downside on the day. While the German DAX Index plunged by 1.9 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index tumbled by 1.6 percent and 1.4 percent, respectively.

In the bond market, treasuries have climbed off their worst levels but remain firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.9 basis points at 2.963 percent.

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