U.S. Stocks Pull Back Off Record Highs Ahead Of Jobs Data

After climbing to new record highs in the previous session, stocks turned in a relatively lackluster performance during trading on Thursday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day in negative territory. The Dow slid 248.33 points or 0.6 percent to 44,765.71, while the Nasdaq dipped 34.86 points or 0.2 percent to 19,700.26 and the S&P 500 edged down 11.38 points or 0.2 percent to 6,075.11.

The more notable pullback by the Dow came amid a steep drop by shares of UnitedHealth (UNH), with the health insurance giant tumbling by 5.2 percent following yesterday’s fatal shooting of UnitedHealthcare CEO Brian Thompson.

Overall trading activity was somewhat subdued, however, as traders seemed reluctant to make significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to jump by 200,000 jobs in November after inching up by 12,000 jobs in October, while the unemployment rate is expected to tick up to 4.2 percent from 4.1 percent.

The jobs data could impact the outlook for interest rates ahead of the Federal Reserve’s next monetary policy meeting later this month.

While traders have recently expressed greater confidence the Fed will lower rates by another 25 basis points at the December meeting, there remains uncertainty about the likelihood of continued rate cuts at future meetings.

“Taken together, the October and November reports should show trend job growth continuing at a pace that allows the Fed to lower rates by 25bps at the December 18 FOMC meeting but we expect them to skip cutting rates in January,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

With the monthly jobs report looming, the Labor Department released a report this morning showing a modest increase by first-time claims for U.S. unemployment benefits in the week ended November 30th.

The report said initial jobless claims rose to 224,000, an increase of 9,000 from the previous week’s revised level of 215,000.

Economists had expected jobless claims to inch up to 215,000 from the 213,000 originally reported for the previous week.

Sector News

While most of the major sectors showed only modest moves on the day, semiconductor stocks moved sharply lower over the course of the session, dragging the Philadelphia Semiconductor Index down by 1.9 percent.

Notable weakness was also visible among computer hardware stocks, as reflected by the 1.2 percent loss posted by the NYSE Arca Computer Hardware Index.

Healthcare and housing stocks also moved to the downside on the day, while airline stocks surged, driving the NYSE Arca Airline Index up by 2.6 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. While Japan’s Nikkei 225 Index rose by 0.3 percent, South Korea’s Kospi slid by 0.9 percent.

Meanwhile, the major European markets all moved to the upside on the day. The German DAX Index advanced by 0.6 percent, the French CAC 40 Index climbed by 0.4 percent and the U.K.’s FTSE 100 Index crept up by 0.2 percent.

In the bond market, treasuries recovered from early weakness to end the session roughly flat. The yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 4.180 percent after reaching a high of 4.225 percent.

Looking Ahead

While the monthly jobs report is likely to be in the spotlight on Friday, traders are also likely to keep an eye on a report on consumer sentiment, as it includes readings on consumers’ inflation expectations. Remarks by several Fed officials may also attract attention.

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