Nasdaq Reaches Eight-Month Closing High But Dow Extends Losing Streak

Stocks came under pressure in early trading on Thursday but regained ground over the course of the session. The major averages climbed well off their worst levels of the day, with the tech-heavy Nasdaq reaching positive territory.

The Nasdaq rose 22.06 points or 0.2 percent to 12,328.51, its best closing level in over eight months. Meanwhile, the S&P 500 dipped 7.02 points or 0.2 percent to 4,130.62 and the Dow slid 221.82 points or 0.7 percent to 33,309.51.

The Dow closed lower for the fourth consecutive session, with a steep drop by shares of Disney (DIS) weighing on the blue chip index.

Disney plunged by 8.7 percent to a four-month closing low after the entertainment giant reported fiscal second quarter earnings and revenue roughly in line with estimates but a decrease in streaming subscribers.

Renewed concerns about turmoil in the banking sector also weighed on Wall Street amid a nosedive by shares of PacWest Bancorp (PACW).

PacWest Bancorp plummeted by 22.7 percent after the regional bank revealed in a SEC filing that deposits slumped by 9.5 percent last week.

Meanwhile, the Nasdaq may have benefited from easing concerns about the outlook for interest rates following the release of the Labor Department’s report on producer price inflation in the month of April.

The Labor Department said its producer price index for final demand inched up by 0.2 percent in April after falling by a revised 0.4 percent in March.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.5 percent drop originally reported for the previous month.

The report also showed the annual rate of producer price growth slowed to 2.3 percent in April from 2.7 percent in March. The pace of growth was expected to slow to 2.4 percent.

Following yesterday’s report on consumer price inflation, the data added to optimism the Federal Reserve will leave interest rates unchanged next month.

A separate Labor Department report showed initial jobless claims climbed to their highest level in well over a year in the week ended May 6th.

The report said initial jobless claims rose to 264,000, an increase of 22,000 from the previous week’s unrevised level of 242,000. Economists had expected jobless claims to inch up to 245,000.

With the much bigger than expected advance, jobless claims reached their highest level since hitting a matching number in the week ended October 30, 2021.

Sector News

Gold stocks moved sharply lower over the course of the session, dragging the NYSE Arca Gold Bugs Index down by 3.6 percent.

The sell-off by gold stocks came amid a decrease by the price of the precious metal, with gold for June delivery falling $16.60 to $2,020.50 an ounce.

Substantial weakness also remained visible among oil service stocks, resulting in a 2.9 percent slump by the Philadelphia Oil Service Index. The index plunged to a nearly seven-month closing low.

Oil service stocks moved lower along with the price of crude oil, as crude for June delivery tumbled $1.69 to $70.87 a barrel.

Steel, banking and utilities stocks also saw notable weakness on the day, while retail stocks moved to the upside over the course of the session.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region closed modestly lower on Thursday, although Japan’s Nikkei 225 Index inched slightly higher. China’s Shanghai Composite Index slipped by 0.3 percent, while Hong Kong’s Hang Seng Index edged down by 0.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index rose by 0.3 percent, the U.K.’s FTSE 100 Index eased by 0.1 percent and the German DAX Index fell by 0.4 percent.

In the bond market, treasuries saw further upside following the notable seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.2 basis points to 3.397 percent.

Looking Ahead

Reports on import and export prices and consumer sentiment may attract attention on Friday, with the latter including readings on inflation expectations.

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