Dow Extends Winning Streak But Nasdaq Pulls Back Sharply

After generally moving higher over the past several sessions, the major U.S. stock indexes turned in a starkly mixed performance during trading on Thursday.

While the Dow closed higher for the ninth straight session, reaching its best closing level in over a year, the tech-heavy Nasdaq pulled back sharply following recent strength.

The Dow ended the session well off its best levels of the day but still closed up 163.97 points or 0.5 percent at 35,225.18, while the Nasdaq plunged 294.71 points or 2.1 percent to 14,063.31 and the S&P 500 slid 30.85 points or 0.7 percent to 4,354.87.

The sharp pullback by the Nasdaq came amid a negative reaction to earnings news from companies like Netflix (NFLX) and Tesla (TSLA).

Shares of Netflix plummeted by 8.4 percent after the streaming giant reported better than expected second quarter earnings but weaker than expected revenues.

Electric car maker Tesla also plunged by 9.7 percent after reporting second quarter earnings and revenues that exceeded analyst estimates but a notable decrease in operating margins.

On the other hand, the narrower Dow benefitted from a spike by shares of Johnson & Johnson (JNJ), with the healthcare giant surging by 6.1 percent.

The jump by J&J came after the company reported better than expected second quarter earnings and raised its full-year guidance.

Dow component IBM Corp. (IBM) also shot up by 2.1 percent after the tech giant reported second quarter earnings that beat expectations.

Traders were also reacting to a Labor Department report showing first-time claims for U.S. unemployment benefits unexpectedly dipped in the week ended July 15th.

The report said initial jobless claims slipped to 228,000, a decrease of 9,000 from the previous week’s unrevised level of 237,000. Economists had expected jobless claims to inch up to 242,000.

Sector News

Semiconductor stocks turned in some of the worst performances on the day, with the Philadelphia Semiconductor Index plunging by 3.6 percent. The index continued to give back ground after ending Tuesday’s trading at its best closing level in over a year.

Shares of Taiwan Semiconductor (TSM) plummeted by 5.1 percent after the chipmaker reported a steep drop in second quarter profits.

Substantial weakness was also visible among gold stocks, as reflected by the 2.9 percent nosedive by the NYSE Arca Gold Bugs Index. The sell-off by gold stocks came as the price of gold for August delivery fell $9.90 to $1,970.90 an ounce.

Housing stocks also moved sharply lower following disappointing existing home sales data, dragging the Philadelphia Housing Sector Index down by 2.4 percent.

Software, retail and airline stocks also saw considerable weakness, while pharmaceutical and healthcare stocks rallied following J&J’s upbeat results.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index tumbled by 1.2 percent, while China’s Shanghai Composite Index slumped by 0.9 percent.

Meanwhile, the major European markets moved to the upside on the day. While the German DAX Index climbed by 0.6 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index both advanced by 0.8 percent.

In the bond market, treasuries showed a significant pullback following recent strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, spiked 11.2 basis points to 3.854 percent.

Looking Ahead

Amid a lack of major U.S. economic data, trading on Friday may continue to be driven by reaction to the latest batch of earnings news.

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