U.S. Stocks Remain Firmly Negative After Early Sell-Off

After coming under pressure early in the session, stocks continue to see significant weakness in mid-day trading on Thursday. The major averages remain firmly negative, with the Dow pulling back well off yesterday’s record closing high.

Currently, the major averages are off their worst levels but still posting steep losses. The Dow is down 289.54 points or 0.9 percent at 31,323.48, the Nasdaq is down 204.33 points or 1.5 percent at 13,761.16 and the S&P 500 is down 40.39 points or 1 percent at 3,890.94.

A negative reaction to earnings news from Walmart (WMT) contributed to the early sell-off on Wall Street, with the retail giant plunging by 5.3 percent.

The steep drop by Walmart comes after the company reported weaker than expected fourth quarter earnings and warned of slowing sales growth in the coming year.

The weakness on Wall Street also comes following the release of a Labor Department report showing initial jobless claims came in well above economist estimates in the week ended February 13th, with claims rising from a significantly upwardly revised level.

The report said initial jobless claims edged up to 861,000, an increase of 13,000 from the previous week’s revised level of 848,000.

Economists had expected jobless claims to dip to 765,000 from the 793,000 originally reported for the previous week.

Traders have recently viewed disappointing jobs data as positive for the markets amid expectations it will put further pressure on lawmakers to pass additional stimulus.

However, traders may now see the prospect of more stimulus as priced into the markets, inspiring them to use the data to cash in on the recent strength in the markets.

A separate report from the Commerce Department showed housing starts pulled back by much more than expected in the month of January.

The Labor Department also released a report showing a bigger than expected jump in import prices, which may have added to recent inflation concerns.

Sector News

Energy stocks continue to turn in some of the market’s worst performances on the day even though the price of crude oil has moved modestly higher. Crude for March delivery is currently inching up $0.16 to $61.30 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 3.7 percent, the NYSE Arca Natural Gas Index is down by 2.4 percent and the NYSE Arca Oil Index is down by 1.6 percent.

Significant weakness also remains visible among semiconductor stocks, as reflected by the 1.7 percent drop by the Philadelphia Semiconductor Index. The index is pulling back further off the record closing high it set on Tuesday.

Brokerage stocks also continue to see considerable weakness on the day, with the NYSE Arca Broker/Dealer Index falling by 1.7 percent.

Telecom, biotechnology and steel stocks have also shown notable moves to the downside, reflecting broad based weakness on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index dipped by 0.2 percent, while Hong Kong’s Hang Seng Index tumbled by 1.6 percent.

The major European markets also moved to the downside on the day. While the U.K.’s FTSE 100 Index plunged by 1.4 percent, the French CAC 40 Index slid by 0.7 percent and the German DAX Index edged down by 0.2 percent.

In the bond market, treasuries have moved modestly higher over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.7 basis points at 1.284 percent.

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