WASHINGTON (dpa-AFX) - After an initial move to the upside, stocks have given back ground over the course of morning trading on Thursday. The major averages have pulled back well off their highs of the session and into negative territory.
Currently, the major averages are off their worst levels of the day but still in the red. The Dow is down 131.44 points or 0.4 percent at 37,564.29, the Nasdaq is down 50.95 points or 0.3 percent at 14,918.70 and the S&P 500 is down 16.40 points or 0.3 percent at 4,767.05.
The downturn on Wall Street comes as traders digest the Labor Department's highly anticipated report on consumer price inflation in December, which showed prices rose by slightly more than expected.
The Labor Department said its consumer price index climbed by 0.3 percent in December after inching up by 0.1 percent in November. Economists had expected consumer prices to rise by 0.2 percent.
Excluding food and energy prices, core consumer prices still rose by 0.3 percent in December, matching the increase seen in November as well as economist estimates.
The report also showed the annual rate of consumer price growth accelerated to 3.4 percent in December from 3.1 percent in November. The annual rate of growth was expected to tick up to 3.2 percent.
Meanwhile, the annual rate of growth by core consumer prices slowed to 3.9 percent in December from 4.0 percent in November. Economists had expected the pace of core price growth to decelerate to 3.8 percent.
A number of economists have said the data makes the Federal Reserve less likely to cut interest rates in March, with many predicting the central bank will hold off until its May meeting.
'In the wake of the Federal Reserve's dovish shift in December, financial markets had moved to price an interest rate cut as soon as March,' said ING Chief International Economist James Knightley.
'However, the tight jobs market and today's firmer-than-expected inflation numbers suggest this is unlikely, barring an economic or financial system shock,' he added. 'We continue to think the Fed will prefer to wait until May.'
A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly edged slightly lower in the week ended January 6th.
The report said initial jobless claims slipped to 202,000, a decrease of 1,000 from the previous week's revised level of 203,000. Economists had expected jobless claims to rise to 210,000 from the 202,000 originally reported for the previous week.
Sector News
Biotechnology stocks are extending the pullback seen over the two previous sessions, dragging the NYSE Arca Biotechnology Index down by 1.8 percent.
Considerable weakness has also emerged among utilities stocks, as reflected by the 1.8 percent drop by the Dow Jones Utility Average.
Banking stocks are also seeing notable weakness ahead of the release of key earnings news from the sector on Friday, with the KBW Bank Index falling by 1.6 percent.
Telecom, transportation and tobacco stocks have also moved to the downside, while oil stocks are seeing some strength amid a sharp increase by the price of crude oil.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index surged by 1.8 percent, while Hong Kong's Hang Seng Index jumped by 1.3 percent.
Meanwhile, the major European markets have moved to the downside on the day. While the U.K.'s FTSE 100 Index has slid by 0.7 percent, the German DAX Index is down by 0.5 percent and the French CAC 40 Index is down by 0.2 percent.
In the bond market, treasuries have shown a lack of direction following the release of the inflation data. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 4.026 percent.
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