WASHINGTON (dpa-AFX) - After seeing substantial volatility early in the session, stocks moved mostly higher over the course of the trading day on Thursday. With the upward move, the major averages partly offset the steep losses posted in the two previous sessions.
The major averages all closed firmly in positive territory, with the tech-heavy Nasdaq outperforming its counterparts. While the Nasdaq surged up 87.02 points or 1.1 percent to 7,872.26, the S&P 500 advanced 23.02 points or 0.8 percent to 2,910.63 and the Dow rose 122.42 points or 0.5 percent to 26,201.04.
The strength that emerged on Wall Street was partly due to bargain hunting, with traders picking up stocks at reduced levels following recent weakness.
The Nasdaq hit a two-month intraday low before rebounding, while the Dow and the S&P 500 fell to their lowest intraday levels in over a month.
Confidence the Federal Reserve will continue to cut interest rates also contributed to the turnaround, as traders digested a report from the Institute for Supply Management showing U.S. service growth slowed by more than expected in the month of September.
The ISM said its non-manufacturing index dropped to 52.6 in September after climbing to 56.4 in August. While a reading above 50 still indicates service sector growth, the index has been expected to show a more modest dip to 55.0.
With the much bigger than expected decrease, the non-manufacturing slumped to its lowest level since hitting 51.8 in August of 2016.
'The respondents are mostly concerned about tariffs, labor resources and the direction of the economy,' said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.
The report initially dragged stocks lower, as the data reinforced the economic worries raised by the weak manufacturing and private sector jobs data released earlier this week.
However, traders eventually looked at the data in a positive light, as it could emphasize to the Fed the need for additional stimulus.
'The latest developments should add a sense of urgency to talks seeking a resolution to the US-China trade dispute and will keep the pressure on the Fed to ease monetary policy further,' said ING Chief International Economist James Knightley.
He added, 'We continue to look for a December rate cut and a further move in 1Q20, but the risks are increasingly skewed towards more aggressive action.'
Sector News
Oil service stocks moved sharply higher over the course of the trading session, driving the Philadelphia Oil Service Index up by 2.1 percent. The index rebounded after hitting its lowest intraday level in a month.
The rebound by oil service stocks came as traders went bargain hunting despite a continued decrease by the price of crude oil. Crude for November delivery slipped $0.19 to $52.45 a barrel.
Bargain hunting also contributed to significant strength among biotechnology stocks, with the NYSE Arca Biotechnology Index surging up by 1.9 percent after ending the previous session at a nine-month closing low.
Semiconductor and software stocks also moved notably higher on the day, contributing to the advance by the tech-heavy Nasdaq.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower, with markets in China and South Korea closed for holidays. Japan's Nikkei 225 Index dove by 2 percent, while Australia's S&P/ASX 200 Index plunged by 2.2 percent.
Meanwhile, the major European markets turned in a mixed performance on the day, as the German markets were closed for a holiday. While the U.K.'s FTSE 100 Index fell by 0.6 percent, the French CAC 40 Index rose by 0.3 percent.
In the bond market, treasuries extended a recent rally following the weaker than expected service sector data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6 basis points to 1.536 percent.
Looking Ahead
Trading on Friday is likely to be driven by reaction to the Labor Department's closely watched monthly employment report.
Employment is expected to increase by 145,000 jobs in September after rising by 130,000 jobs in August, while the unemployment rate is expected to hold at 3.7 percent.
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