U.S. Stocks Continue To See Significant Weakness In Afternoon Trading

Stocks moved mostly lower over the course of morning trading on Thursday and continue to see significant weakness in the afternoon. The tech-heavy Nasdaq has led the way lower, tumbling to its lowest intraday level in five months.

Currently, the major averages are just off their lows of the session. The Nasdaq is down 242.73 points or 1.9 percent at 12,578.49, the S&P 500 is down 49.12 points or 1.2 percent at 4,137.65 and the Dow is down 214.77 points or 0.7 percent at 32,821.16.

A negative reaction to quarterly results from Meta Platforms (META) is weighing on the Nasdaq, with the Facebook parent plunging by 4.6 percent despite reporting third quarter results that exceeded analyst estimates on the top and bottom lines.

The weakness on Wall Street also comes following the release of a slew of U.S. economic data, including a Commerce Department report showing GDP soared by more than expected in the third quarter of 2023.

The Commerce Department said GDP spiked by 4.9 percent in the third quarter after jumping by 2.1 percent in the second quarter. Economists had expected GDP to surge by 4.2 percent.

The stronger than expected GDP growth partly reflected a surge in consumer spending, which soared by 4.0 percent in the third quarter after climbing by 0.8 percent in the second quarter.

The resilience of the U.S. economy has added to recent concerns about the Federal Reserve leaving interest rates higher for longer than investors had hoped.

“The Fed will see the third quarter’s surge in GDP as evidence that the economy is robust, and that restrictive interest rates continue to be appropriate near-term,” said Bill Adams, Chief Economist for Comerica Bank.

He added, “That means that the Fed will be on hold for a while even if inflation slows further near-term—and with gas prices down sharply in October, the next CPI report will probably be a cool one.”

The Commerce Department also released a report showing new orders for U.S. manufactured durable goods spiked by much more than expected in the month of September.

The report said durable goods orders soared by 4.7 percent in September following a revised 0.1 percent dip in August.

Economists had expected durable goods orders to jump by 1.5 percent compared to the 0.1 percent uptick that had been reported for the previous month.

Excluding orders for transportation equipment, durable goods orders climbed by 0.5 percent in September, matching the increase in August. Ex-transportation orders were expected to rise by 0.2 percent.

Meanwhile, the Labor Department released a report showing first-time claims for U.S. unemployment benefits edged higher in the week ended October 21st.

The report said initial jobless claims rose to 210,000, an increase of 10,000 from the previous week’s revised level of 200,000. Economists had expected jobless claims to rise to 208,000 from the 198,000 originally reported for the previous month.

Sector News

Oil service stocks have moved sharply lower over the course of the session, dragging the Philadelphia Oil Service Index down by 3.3 percent to a three-month closing low.

The sell-off by oil service stocks comes amid a steep drop by the price of crude oil, with crude for December delivery tumbling $1.67 to $83.72 a barrel.

Considerable weakness also remains visible among computer hardware stocks, as reflected by the 2.8 percent slump by the NYSE Arca Computer Hardware Index.

Software stocks have also show a significant move to the downside, resulting in a 2.5 percent drop by the Dow Jones U.S. Software Index.

Transportation, pharmaceutical and retail stocks are also seeing notable weakness, while commercial real estate, housing and financial stocks are bucking the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index dove by 2.1 percent, while South Korea’s Kospi plummeted by 2.7 percent.

The major European markets also moved to the downside on the day. While the German DAX Index slumped by 1.1 percent, the U.K.’s FTSE 100 Index slid by 0.8 percent and the French CAC 40 Index fell by 0.4 percent.

In the bond market, treasuries have moved notably higher despite the upbeat U.S. economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 10.8 basis points at 4.845 percent.

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