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

Following the sell-off seen early in the session, stocks continue to see substantial weakness in afternoon trading on Thursday. With the steep drop on the day, the major averages have offset the rally seen late in the previous session.

Currently, the major averages are off their worst levels of the day but remain sharply lower. The Dow is down 991.06 points or 2.9 percent at 33,070.00, the Nasdaq is down 594.89 points or 4.6 percent at 12,369.97 and the S&P 500 is down 142.37 points or 3.3 percent at 4,157.80.

The sell-off on Wall Street comes as traders cash in on the relief rally seen following the Federal Reserve’s monetary policy announcement on Wednesday.

The Federal Reserve raised interest rates by 50 basis points as widely expected, although Fed Chair Jerome Powell was less hawkish than some had feared.

During his post-meeting press conference, Powell said the Fed is not “actively considering” a 75 basis point rate hike, temporarily offsetting worries about the outlook for rates.

However, concerns about higher rates, inflation, the economic outlook and the ongoing war in Ukraine remain, contributing to the sharp pullback on Wall Street.

A sharp increase in treasury yields is also weighing on the markets, the yield on the benchmark ten-year note soaring to its highest levels in well over three years.

Traders are also looking ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to jump by 391,000 jobs in April after surging by 431,000 jobs in March, while the unemployment rate is expected to edge down to 3.5 percent from 3.6 percent.

With the monthly jobs report looming, the Labor Department released a report this morning showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended April 30th.

The report showed initial jobless claims rose to 200,000, an increase of 19,000 from the previous week’s revised level of 181,000.

Economists had expected jobless claims to inch up to 182,000 from the 180,000 originally reported for the previous week.

A separate report from the Labor Department showed a substantial pullback in labor productivity in the first quarter of 2022.

The Labor Department said labor productivity plunged by 7.5 percent in the first quarter, reflecting the largest decline since the third quarter of 1947.

Sector News

Steel stocks have moved sharply lower amid concerns about the outlook for global demand, resulting in a 6.3 percent nosedive by the NYSE Arca Steel Index. The index has tumbled to its lowest intraday level in well over a month.

Substantial weakness also remains visible among retail stocks, as reflected by the 4.9 percent plunged by the Dow Jones U.S. Retail Index.

Online home goods retailer Wayfair (W) is showing a particularly steep drop after reporting a wider than expected first quarter loss.

Oil service stocks have also come under pressure over the course of the session, dragging the Philadelphia Oil Service Index down by 4.4 percent. The weakness in the sector comes as the price of crude oil for June delivery is falling $0.78 to $107.03 a barrel.

Semiconductor, housing, airline and gold stocks are also seeing significant weakness on the day, reflecting broad based selling pressure.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday, with the markets in Japan and South Korea closed for holidays. China’s Shanghai Composite Index advanced by 0.7 percent, while Hong Kong’s Hang Seng Index fell by 0.4 percent.

The major European markets also ended the day mixed after an early rally. While the U.K.’s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index and the German DAX Index declined by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries have pulled back sharply after showing a strong move to the upside going into the close on Wednesday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 17.3 basis points at 3.090 percent.

Source: Read Full Article