After falling sharply early in the session, stocks have regained some ground over the course of the trading day on Thursday. The major averages have climbed well off their worst levels of the day but remain in negative territory.
The Dow is currently down 81.83 points or 0.3 percent at 28,432.17 after falling by more than 330 points in early trading. The Nasdaq is down 111.68 points or 1 percent at 11,657.05 and the S&P 500 is down 18.12 points or 0.5 percent at 3,470.55.
The initial weakness on Wall Street came amid renewed uncertainty about a new stimulus bill after Treasury Secretary Steven Mnuchin suggested on Wednesday that a new relief package is not likely to pass before next month’s elections.
Senate Majority Leader Mitch McConnell has also cast doubts on whether a bill can pass before the elections and recently announced plans to vote on a more limited relief package.
However, selling pressure waned after Mnuchin told CNBC’s “Squawk Box” that he and President Donald Trump are committed to getting a stimulus deal done.
Mnuchin said he plans to talk to House Speaker Nancy Pelosi later today and tell her that he won’t let the issue of testing, a key sticking points in talks, stand in the way.
“We’ll fundamentally agree with their testing language subject to some minor issues,” Mnuchin said. “This issue is being overblown.”
Nonetheless, stocks have remained mostly lower as traders also react to a surge in new coronavirus cases across Europe as well as tightened restrictions to battle the second wave of infections.
The European Commission warned that EU governments were unprepared for the new surge of Covid-19 infections and urged states to adopt a common strategy for the new phase of the pandemic.
Negative sentiment was also generated in reaction to a report from the Labor Department showing an unexpected increase in first-time claims for U.S. unemployment benefits in the week ended October 10th.
The report said initial jobless claims climbed to 898,000, an increase of 53,000 from the previous week’s revised level of 845,000. Economists had expected jobless claims to edge down to 825,000 from the 840,000 originally reported for the previous week.
With the unexpected increase, jobless claims reached their highest level since topping 1 million in the week ended August 22nd.
“Failure to pass additional fiscal relief measures poses considerable downside risk to the economy, particularly as Covid-19 cases are on the rise and would likely lead to further job losses,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
She added, “Failure to provide more relief raises the risk that some individuals will lose benefits altogether at the start of 2021.”
Airline stocks have climbed off their worst levels of the day but continue to see significant weakness in mid-day trading, with the NYSE Arca Airline Index down by 1.6 percent.
United Airlines (UAL) continues to post a particularly steep loss on the day after reporting a wider than expected third quarter loss.
Considerable weakness also remains visible among pharmaceutical stocks, as reflected by the 1.5 percent drop by the NYSE Arca Pharmaceutical Index.
Biotechnology, software and gold stocks also continue to see notable weakness, although most of the major sectors have recovered from their worst levels.
Meanwhile, brokerage stocks have shown a substantial turnaround, with the NYSE Arca Broker/Dealer Index climbing by 1.1 percent after falling by as much as 1 percent.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index fell by 0.5 percent, while Hong Kong’s Hang Seng Index tumbled by 2.1 percent.
The major European markets also showed significant moves to the downside on the day. While the German DAX Index plummeted by 2.5 percent, the French CAC 40 Index plunged by 2.1 percent and the U.K.’s FTSE 100 Index slumped by 1.7 percent.
In the bond market, treasuries have pulled back near the unchanged line after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 0.717 percent.
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