Nasdaq Showing Another Steep Drop But Dow Inches Higher

Stocks have moved mostly lower in morning trading on Thursday following the mixed performance seen in the previous sessions. The tech-heavy Nasdaq has shown a significant decrease, slumping to its lowest intraday level in over a month.

The Nasdaq has climbed off its worst levels in recent trading but currently remains down 106.63 points or 0.8 percent at 13,475.80. The S&P 500 is also down 10.04 points or 0.2 percent at 4,157.55, while the narrower Dow is up 42.56 points or 0.1 percent at 34,272.90 after reaching a new record intraday high.

The weakness on Wall Street, particularly among tech stocks, may reflect concerns about the outlook for monetary policy following another upbeat jobs report.

With the more closely watched monthly jobs report looming, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits fell by much more than expected in the week ended May 1st.

The report said initial jobless claims slid to 498,000, a decrease of 92,000 from the previous week’s revised level of 590,000.

Economists had expected initial jobless claims to edge down to 540,000 from the 553,000 originally reported for the previous week.

The bigger than expected decrease once again dragged jobless claims down their lowest level since the early days of the coronavirus pandemic.

“Claims have declined by 33% since the start of April, further confirmation that a recovery in the labor market is well underway,” said Nancy Vanden Houten, Lead Economist at Oxford Economics. “We expect more evidence of that recovery in tomorrow’s April jobs report.”

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report for April.

Economists currently expect employment to jump by 978,000 jobs in April after surging up by 916,000 jobs in May. The unemployment rate is also expected to dip to 5.8 percent from 6.0 percent.

Upbeat economic data combined with recent readings showing accelerations in price growth may lead to worries that the Federal Reserve will need to begin tightening its ultra-easy monetary policy sooner rather than later.

Energy stocks are pulling back after moving sharply higher in the previous session, with a decrease by the price of crude oil weighing on the sector. Crude for June delivery is tumbling $0.95 to $64.68 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 2.2 percent, the NYSE Arca Oil Index is down by 1.7 percent and the NYSE Arca Natural Gas Index is down by 1.5 percent.

Considerable weakness has also emerged among airline stocks, as reflected by the 1.5 percent drop by the NYSE Arca Airline Index.

Brokerage, semiconductor and software stocks are also seeing notable weakness, while gold stocks are bucking the downtrend amid a sharp increase by the price the precious metal.

With gold for June delivery surging up $28.50 to $1,812.80 an ounce, the NYSE Arca Gold Bugs Index has spiked by 3.8 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index surged up by 1.8 percent, while China’s Shanghai Composite Index dipped by 0.2 percent.

The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index is down by 0.2 percent and the German DAX Index is down by 0.5 percent.

In the bond market, treasuries are extending the upward trend seen over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.1 basis points at 1.563 percent.