Stocks Come Under Pressure Due To Sell-Off In Europe - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks have moved sharply lower over the course of the trading day on Thursday. The losses on the day are extending a recent downward trend by the markets, with the major averages falling to their lowest levels in over a month.

The major averages have recently climbed off their lows for the session but remain firmly in the red. The Dow is down 85.45 points or 0.5 percent at 16,719.26, the Nasdaq is down 37.72 points or 0.9 percent at 4,384.36 and the S&P 500 is down 14.01 points or 0.7 percent at 1,932.15.

A sell-off in the European markets contributed to the weakness that emerged on Wall Street, with traders reacting negatively to remarks by European Central Bank President Mario Draghi.

In a press conference following the ECB's monetary policy meeting, Draghi provided details regarding the bank's bond purchase plans.

Draghi revealed that the ECB will start buying covered bonds in mid-October and asset-backed securities at some point in the fourth quarter.

"As expected, the ECB fleshed out details of its Asset Backed Securities and covered bond buying programs, but it did little to suggest that there are any further policy initiatives imminent," said Howard Archer, Chief U.K. and European Economist at IHS Global Insight.

He added, "In particular, the ECB does not appear poised to pull the QE trigger in the immediate future at least, which likely at least partly reflects intense German opposition to such a move."

On the U.S. economic front, the Labor Department released a report showing an unexpected drop in initial jobless claims in the week ended September 27th.

The report said initial jobless claims fell to 287,000 from the previous week's revised level of 295,000, while economists had expected jobless claims to edge up to 297,000.

The data generated some optimism about tomorrow's monthly jobs report but also added to recent concerns about the outlook for U.S. monetary policy.

A separate report from the Commerce Department showed that U.S. factory orders pulled back by a little more than expected in August after surging higher in July.

Sector News

Energy stocks have helped to lead the markets lower on the day amid a continued decrease by the price of crude oil. Crude for November is currently sliding $1.15 to $89.58 a barrel, dropping below $90 a barrel for the first time in seventeen months.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index has plummeted by 2.8 percent and the NYSE Arca Oil & Gas Index has tumbled by 2 percent.

Considerable weakness has also emerged among semiconductor stocks, as reflected by the 1.8 percent loss being posted by the Philadelphia Semiconductor Index. Cree (CREE) is leading the sector lower after warning of weaker than expected first quarter results.

Steel stocks have also shown a substantial move to the downside on the day, dragging the NYSE Arca Steel Index down by 1.6 percent. The drop extends a recent downtrend by the index, which has fallen to its lowest intraday level in over a year.

Computer hardware, biotechnology, and chemical stocks are also seeing significant weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region came under pressure on Thursday. Japan's Nikkei 225 Index dove by 2.6 percent, while Australia's All Ordinaries Index slumped by 0.7 percent. The Hong Kong and Chinese markets remained closed for holidays.

The major European markets also showed notable moves to the downside on the day. While the French CAC 40 Index plummeted by 2.8 percent, the German DAX Index tumbled by 2 percent and the U.K.'s FTSE 100 Index plunged by 1.7 percent.

In the bond market, treasuries have turned higher over the course of the session after seeing early weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 2.389 percent.