WASHINGTON (dpa-AFX) - Stocks showed a lack of direction early in the session on Thursday have moved modestly lower over the course of the trading day. With the dip, the major averages are more than offsetting the slim gains posted in the previous session.
Currently, the major averages are off their lows of the session but still in the red. The Dow is down 240.97 points or 0.6 percent at 41,955.55, the Nasdaq is down 39.55 points or 0.2 percent at 17,885.57 and the S&P 500 is down 17.55 points or 0.3 percent at 5,691.99.
The modest weakness on Wall Street comes following the release of a report from the Institute for Supply Management showing its reading on U.S. service sector activity jumped to its highest level in well over a year in September.
The ISM said its services PMI shot up to 54.9 in September from 51.5 in August, with a reading above 50 indicating growth. Economists had expected the index to inch up to 51.7.
With the much bigger than expected increase, the services PMI reached its highest level since hitting 55.0 in February 2023.
While the data suggests continued economic strength, it has also further reduced optimism the Federal Reserve will continue aggressively cutting interest rates in the coming months.
The report also said the prices index rose to 59.4 in September from 57.3 in August, indicating a faster pace of price growth.
Meanwhile, traders also continue to look ahead to the release of the Labor Department's closely watched monthly jobs report on Friday.
Economists currently expect the report to show employment rose by 140,000 jobs in September after climbing by 142,000 jobs in August, while the unemployment rate is expected to hold at 4.2 percent.
The data could impact the outlook for the U.S. economy as well as expectations regarding how aggressively the Federal Reserve will lower interest rates.
With the jobs data looming, CME Group's FedWatch Tool is currently indicating a 67.0 percent chance the Fed will lower rates by a quarter point and a 32.9 percent chance of another half point rate cut.
A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report this morning showing an uptick by first-time claims for U.S. unemployment benefits in the week ended September 28th.
The report said initial jobless claims rose to 225,000 last week, an increase of 6,000 from the previous week's revised level of 219,000.
Economists had expected jobless claims to inch up to 220,000 from the 218,000 originally reported for the previous week.
The bigger than expected rebound came a week after jobless claims fell to their lowest level since hitting 216,000 in the week ended May 18th.
Sector News
Gold stocks have moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 2.5 percent. The weakness in the sector comes despite a modest increase by the price of gold.
Considerable weakness is also visible among airline stocks, as reflected by the 1.5 percent loss being posted by the NYSE Arca Airline Index.
Networking, steel and housing stocks are also seeing notable strength, while energy stocks have moved to the upside amid a sharp increase by the price of crude oil.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index surged by 2.0 percent, while Hong Kong's Hang Seng Index slumped by 1.5 percent.
Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index has tumbled by 1.5 percent, the German DAX Index is down by 1.0 percent and the U.K.'s FTSE 100 Index is down by 0.2 percent.
In the bond market, treasuries have come under pressure over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.5 basis points at 3.830 percent.
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