Major Averages Climb Off Worst Levels But Remain In The Red

After coming under pressure early in the session, stocks have regained ground over the course of the trading day on Thursday. The major averages have climbed well off their worst levels but remain in the red, with the Dow still posting a notable loss.

Currently, the Dow is down 257.35 points or 0.7 percent at 38,184.19 after hitting its lowest intraday level in almost a month. The Nasdaq is also down 58.40 points or 0.4 percent at 16,862.18, while the S&P 500 is posting a more modest loss, down 7.66 points or 0.2 percent at 5,259.29.

A nosedive by shares of Salesforce (CRM) is weighing on the Dow, with the cloud-based software company plunging by 21.2 percent to its lowest intraday level in over five months.

Salesforce is under pressure after reporting weaker than expected fiscal first quarter revenues and providing disappointing fiscal second quarter guidance.

Concerns about the outlook for interest rates also continue to weigh on the markets ahead of the release of closely watched inflation data on Friday.

The Commerce Department is due to release its report on personal income and spending in the month of April, which includes readings on inflation said to be preferred by the Federal Reserve.

Economists expect consumer prices to rise by 0.3 percent in April, matching the increase seen in March, while the annual rate of consumer price growth is expected to come in unchanged at 2.7 percent.

The data could have a significant impact on the outlook for interest rates, as Fed officials have repeatedly said they need “greater confidence” inflation is slowing before they will consider cutting rates.

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits crept modestly higher in the week ended May 25th

The report said initial jobless claims rose to 219,000, an increase of 3,000 from the previous week’s revised level of 216,000. Economists had expected jobless claims to inch up to 218,000 from the 215,000 originally reported for the previous week.

Meanwhile, the Commerce Department said gross domestic product climbed by 1.3 percent in the first quarter compared to the previously reported 1.6 percent jump.

The downwardly revised increase, which was in line with economists, compares to the 3.4 percent surge in GDP in the fourth quarter of 2023.

A separate report released by the National Association of Realtors showed a sharp pullback by pending home sales in the U.S. in the month of April.

Sector News

Despite the losses being posted by the major averages, telecom stocks have moved sharply higher on the day, resulting in a 2.5 percent spike by the NYSE Arca North American Telecom Index.

Gold stocks also continue to see substantial strength amid a slight increase by the price of the precious metal, with the NYSE Arca Gold Bugs Index surging by 2.3 percent.

Considerable strength is also visible among computer hardware stocks, as reflected by the 2.2 percent jump by the NYSE Arca Computer Hardware Index.

Computer and printer maker HP Inc. (HPQ) is posting a standout gain after reporting fiscal second quarter results that beat analyst estimates on both the top and bottom lines.

Housing, commercial real estate and transportation stocks are also seeing strength on the day, while Salesforce is leading the software sector, resulting in a 3.8 percent plunge by the Dow Jones U.S. Software Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index and Hong Kong’s Hang Seng Index both tumbled by 1.3 percent, while China’s Shanghai Composite Index decreased by 0.6 percent.

Meanwhile, the major European markets moved to the upside on the day. While the German DAX Index crept up by 0.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both climbed by 0.6 percent.

In the bond market, treasuries have shown a notable rebound after moving sharply lower over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 8.0 basis points at 4.544 percent.

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