Stocks climbed well off their worst levels after an early sell-off but still ended Thursday’s trading firmly in negative territory. With the drop on the day, the Nasdaq and the S&P 500 pulled back off yesterday’s record closing highs.
After plunging by more than 500 points in early trading, the Dow ended the day down 259.86 points or 0.8 percent at 34,421.93. The Nasdaq slid 105.28 points or 0.7 percent to 14,559.79 and the S&P 500 slumped 37.31 points or 0.9 percent to 4,320.82.
Concerns about the outlook for the global economy contributed to the early sell-off on Wall Street amid considerable weakness in the overseas markets.
News that Japan has declared a new state of emergency for Tokyo ahead of the Olympic Games added to worries about the impact of new coronavirus variants.
The U.S. economy has recovered strongly from the pandemic-induced slump, but the rapid spread of variants in other parts of the world has raised concerns about a global slowdown.
Adding to the negative sentiment on Wall Street, the Labor Department released a report showing initial jobless claims unexpectedly inched higher in the week ended July 3rd.
The Labor Department said initial jobless claims crept up to 373,000, an increase of 2,000 from the previous week’s revised level of 371,000.
The uptick surprised economists, who had expected jobless claims to drop to 350,000 from the 364,000 originally reported for the previous week.
The weakness on Wall Street also came amid a continued slump in U.S. treasury yields, with the yield on the benchmark ten-year note once again falling to its lowest levels since February.
Transportation stocks moved sharply lower on the day, dragging the Dow Jones Transportation Average down by 3.3 percent to its lowest closing level in well over three months.
Significant weakness was also visible among gold stocks, as reflected by the 2.8 percent slump by the NYSE Arca Gold Bugs Index.
The weakness among gold stocks came amid a downturn by the price of the precious metal, with gold for August delivery slipping $1.90 to $1,800.20 an ounce after reaching a high of $1,819.50 an ounce.
Housing stocks also saw considerable weakness on the day, resulting in a 2.7 percent drop by the Philadelphia Housing Sector Index.
Financial, steel and semiconductor stocks also showed notable moves to the downside, moving lower along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index fell by 0.8 percent.
The major European markets showed even more substantial moves to the downside. While the French CAC 40 Index plunged by 2 percent, the German DAX Index and the U.K.’s FTSE 100 Index both tumbled by 1.7 percent.
In the bond market, treasuries extended a recent upward trend but closed off their best levels of the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 3.3 basis points to 1.288 percent after hitting a low of 1.268 percent.
Trading activity may be somewhat subdued on Friday amid a relatively quiet day on the U.S. economic front, with traders likely to keep an eye on developments overseas.
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