U.S. Stocks Fall Sharply On Disappointing Earnings, Inflation Data

Stocks have moved sharply lower in morning trading on Thursday, extending the downward trend seen over the past few sessions. With the steep drop, the Nasdaq and the S&P 500 are moving lower for the fourth straight day.

Currently, the major averages are lingering near their lows of the session. The Dow is down 584.26 points or 1.9 percent at 30,188.53, the Nasdaq is down 220.04 points or 2 percent at 11,027.54 and the S&P 500 is down 75.23 points or 2 percent at 3,726.55.

The continued weakness on Wall Street partly reflects disappointing earnings news from financial giants JPMorgan Chase (JPM) and Morgan Stanley (MS).

JPMorgan and Morgan Stanley are down by 4.2 percent and 1 percent, respectively, after reporting second quarter earnings that missed analyst estimates.

Concerns about inflation and higher interest rates also continue to weigh on the markets after the Labor Department released a report showing U.S. producer prices increased by more than expected in the month of June.

The Labor Department said its producer price index for final demand jumped by 1.1 percent in June after climbing by an upwardly revised 0.9 percent in May.

Economists had expected producer prices to increase by 0.8 percent, matching the advance originally reported for the previous month.

The annual rate of producer price growth accelerated to 11.3 percent in June, reflecting the largest spike since a record 11.6 percent jump in March.

Economists had expected the annual rate of producer price growth to slow to 10.7 percent in June from 10.9 percent in May.

The Labor Department released a separate report on Wednesday showing U.S. consumer prices also surged by more than expected in the month of June.

Following the hotter than expected inflation data, CME Group’s FedWatch Tool is currently indicating a 78.6 percent chance of a 100 basis point interest rate hike by the Federal Reserve later this month.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly inched higher in the week ended July 9th.

The report showed initial jobless claims crept up to 244,000, an increase of 9,000 from the previous week’s unrevised level of 235,000. The uptick surprised economists, who had expected jobless claims to come in unchanged.

Gold stocks have moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 6 percent to its lowest intraday level in over two years.

The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, with gold for August delivery slumping $35.40 to $1,700.10 an ounce.

Substantial weakness is also visible among energy stocks, which are plunging along with the price of crude oil. Crude for August delivery is currently tumbling $3.78 to $92.52 a barrel.

Reflecting the weakness in the energy sector, the NYSE Arca Oil Index is down by 4.9 percent, the Philadelphia Oil Service Index is down by 4.8 percent and the NYSE Arca Natural Gas Index is down by 3.5 percent.

Steel stocks are also seeing considerable weakness in morning trading, resulting in a 4.6 percent nosedive by the NYSE Arca Steel Index. The index has fallen to its lowest intraday level in over a year.

Chemical, networking, biotechnology and banking stocks have also shown notable moves to the downside amid broad based weakness on Wall Street.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index climbed by 0.6 percent, while Hong Kong’s Hang Seng Index dipped by 0.2 percent.

Meanwhile, the major European markets have all shown significant moves to the downside on the day. While the French CAC 40 Index has tumbled by 1.9 percent, the U.K.’s FTSE 100 Index is down by 1 percent and the German DAX Index is down y 2.3 percent.

In the bond market, treasuries are giving back ground after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 9.1 basis points at 2.995 percent.