U.S. Stocks Likely To Extend Yesterday’s Sell-Off In Early Trading

After moving sharply lower over the course of the previous session, stocks are likely to see further downside in early trading on Thursday. The major index futures are currently pointing to a notably lower open for the markets, with the Dow futures down by 377 points.

Lingering concerns about the global economy are likely to continue to weigh on Wall Street, dragging the S&P 500 closer to bear market territory.

The S&P 500 is currently about 18 percent below its record closing high, just of the 20 percent decline that signals a bear market.

Traders remain worried that aggressive interest rate hikes by the Federal Reserve could lead to a period of stagflation or an outright recession.

In U.S. economic news, a report released by the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly increased in the week ended May 14th.

The report showed initial jobless claims rose to 218,000, an increase of 21,000 from the previous week’s revised level of 197,000.

Economists had expected jobless claims to edge down to 200,000 from the 203,000 originally reported for the previous week.

A separate report from the Federal Reserve Bank of Philadelphia showed a significant slowdown in the pace of growth in regional manufacturing activity.

Shortly after the start of trading, the National Association of Realtors is scheduled to release its report on existing home sales in the month of April. Existing home sales are expected to decrease by 0.7 percent.

The Conference Board is also due to release its report on leading economic indicators in the month of April. The leading economic index is expected to inch up by 0.1 percent.

After showing a strong upward move in Tuesday’s session, stocks showed a substantial move back to the downside during trading on Wednesday. With the steep drop on the day, the Dow and the S&P 500 ended the session at their lowest closing levels in over a year.

The major averages saw continued weakness late in the session, ending the day near their worst levels. The Dow plunged 1,164.52 points or 3.6 percent to 31,490.07, the Nasdaq plummeted 566.37 points or 4.7 percent to 11,418.15 and the S&P 500 tumbled 165.17 points or 4 percent to 3,923.68.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slumped by 1.9 percent, while Hong Kong’s Hang Seng Index dove by 2.5 percent.

The major European markets have also shown significant moves to the downside on the day. While the U.K.’s FTSE 100 Index has tumbled by 2.2 percent, the French CAC 40 Index is down by 2 percent and the German DAX Index is down by 1.7 percent.

In commodities trading, crude oil futures are slumping $2.98 to $106.61 a barrel after plunging $2.81 to $109.59 a barrel on Wednesday. Meanwhile, after slipping $3 to $1,815.90 an ounce in the previous session, gold futures are climbing $17 to $1,832.90 an ounce.

On the currency front, the U.S. dollar is trading at 127.28 yen versus the 128.23 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0536 compared to yesterday’s $1.0464.