Stocks Continue To Post Losses In Mid-Day Trading - U.S. Commentary

(RTTNews) - Stocks have pulled back sharply over the course of the trading day on Thursday, extending the steep drop seen over the past few sessions. With the sell-off, the major averages are on pace to end the session at their lowest closing levels in well over a year.

The major averages have recently climbed off their worst levels but continue to post steep losses. The Dow is down 322.95 points or 2 percent at 15,591.79, the Nasdaq is down 51.40 points or 1.2 percent at 4,232.19 and the S&P 500 is down 30.56 points or 1.7 percent at 1,821.30.

The substantial weakness on Wall Street is partly due to a continued decrease by the price of crude oil, with crude for March delivery sliding $0.83 to $26.62 a barrel.

The price of oil fell as low as $26.22 a barrel earlier in the session, just slightly above the low of $26.19 a barrel hit last month, which was the weakest since May of 2003.

Concerns about a global supply glut continue to weigh on the price of oil along with worries about the outlook for the global economy.

Selling pressure has also been generated by weakness among stocks around the world, which moved sharply lower on the day as traders continue to express an aversion to risk.

Traders are also keeping an eye on remarks by Federal Reserve Chair Janet Yellen, who is currently testifying before the Senate Banking Committee.

During the question-and-answer portion of her appearance, Yellen acknowledged there is the chance of a recession ahead and said the Fed would not take the possibility of imposing negative interest rates off the table.

Meanwhile, traders have largely shrugged off a report from the Labor Department showing a bigger than expected decrease in initial jobless claims in the week ended February 6th.

The report said initial jobless claims dropped to 269,000, a decrease of 16,000 from the previous week's unrevised level of 285,000. Economists had expected jobless claims to edge down to 281,000.

Sector News

Banking stocks continue to see substantial weakness in mid-day trading, resulting in a 4.1 percent drop by the Dow Jones Banks Index. With the sell-off, the index has fallen to its lowest intraday level in almost three years.

Bank of America (BAC), Citigroup (C), and Regions Financial (RF) are turning in some of the sector's worst performances on the day.

The decrease by the price of crude oil is also contributing to considerable weakness among energy stocks, which are extending a recent downward trend.

Reflecting the weakness in the energy sector, the NYSE Natural Gas Index has plummeted by 2.9 percent, while the Philadelphia Oil Service Index is down by 2.4 percent and the NYSE Arca Oil & Gas Index is down by 2 percent.

Significant weakness is also visible among railroad stocks, as reflected by the 3.3 percent loss being posted by the Dow Jones Railroads Index. The index is pulling back off the one-month closing high set in the previous session.

Brokerage, steel, housing, and chemical stocks are also posting steep losses on the day, while gold stocks are among the few groups bucking the downtrend amid a sharp jump by the price of gold.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday, as the Japanese and Chinese markets remained closed for holidays. Hong Kong's Hang Seng Index plunged by 3.9 percent, playing catch up to the recent losses in the region after being closed for several days.

The major European markets also saw substantial weakness on the day. While the French CAC 40 Index plummeted by 4.1 percent, the German DAX Index and the U.K.'s FTSE 100 Index tumbled by 2.9 percent and 2.4 percent, respectively.

In the bond market, treasuries have moved sharply higher amid the sell-off on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 11.9 basis points at 1.586 percent.