Market Commentary and Intraday News
Stocks May Regain Ground Following Recent Weakness - U.S. Commentary
238 days ago
(RTTNews) - After moving mostly lower over the past few sessions, stocks may move back to the upside in early trading on Thursday. The major index futures are currently pointing to a notably higher open for the markets, with the Dow futures up by 66 points.
The markets may benefit from bargain hunting following the weakness seen in recent sessions, with the S&P 500 likely to regain some ground after closing lower in each of the five previous sessions.
An upbeat report on the sluggish labor market may contribute to the early strength, with the report from the Labor Department showing a much bigger than expected drop in initial jobless claims in the week ended September 22nd.
The report showed that jobless claims fell to 359,000 from the previous week's revised figure of 385,000. Economists had expected jobless claims to drop to 376,000 from the 382,000 originally reported for the previous week.
With the bigger than expected drop, jobless claims fell to their lowest level since coming in at 357,000 in the week ended July 21st.
On the other hand, the Commerce Department released a report showing a sharp drop in durable goods orders in the month of August, with the steep drop largely due to a sharp decline in orders for transportation equipment.
The Commerce Department said durable goods orders fell by 13.2 percent in August following a revised 3.3 percent increase in July. Economists had been expecting durable goods orders to drop by a more modest 5.0 percent.
Excluding a 34.9 percent drop in orders for transportation equipment, durable goods orders fell by a much more modest 1.6 percent in August compared to a 1.3 percent drop in July. However, economists had expected ex-transportation orders to rise by 0.2 percent.
The Commerce Department also released a separate report showing that the U.S. economy expanded by much less than previously estimated in the second quarter.
The report showed that U.S. gross domestic product increased at an annual rate of 1.3 percent in the second quarter compared to the previous estimate of 1.7 percent growth. The downward revision came as a surprise to economists, who had expected the rate of second quarter GDP growth to be unrevised.
Traders may focus on the upbeat jobs data, as the reports from the Commerce Department are largely backward-looking and are seen as providing further support for the Federal Reserve's decision to enact a third round of quantitative easing.
Stocks saw considerable weakness during trading on Wednesday, adding to the steep losses posted on Tuesday. Lingering concerns about the financial situation in Europe continued to weigh on the markets along with a negative reaction to U.S. housing data.
The major averages ended the day firmly in negative territory, although the Dow posted a relatively modest loss. The Dow slipped 44.04 points or 0.3 percent to 13,413.51, while the Nasdaq fell 24.03 points or 0.8 percent to 3,093.70 and the S&P 500 slid 8.27 points or 0.6 percent to 1,433.32.
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