U.S. Interest rate-sensitive utilities, telecom, banking and commercial real estate stocks turned in some of the market’s worst performances. In Malaysia banking, oil & gas and healthcare ended flat at the end of the trading day.
Stocks fluctuated over the course of the trading session on Thursday but largely maintained a negative bias throughout the day. The major averages added to the modest losses posted on Wednesday but remained well off last Friday’s lows.
The major averages all finished the day firmly in the red. The Dow tumbled 346.93 points or 1.2 percent to 29,926.94, the Nasdaq slid 75.33 points or 0.7 percent to 11,073.31 and the S&P 500 slumped 38.76 points or 1.0 percent to 3,744.52.
The weakness on Wall Street came as traders continued to express concerns about the outlook for interest rates and the impact higher rates will have on the economy.
A continued rebound by treasury yields also weighed on the markets, with the yield on the benchmark ten-year note extending the sharp upward move seen on Wednesday, RTT News reported.
Traders were also looking ahead to the release of the Labour Department’s closely watched monthly employment report on Friday.
Economists currently expect employment to jump by 250,000 jobs in September after surging by 315,000 jobs in August, while the unemployment rate is expected to hold at 3.7 percent.
However, Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics, said, “Any easing of labor market conditions will be welcome by the Fed but won’t change the FOMC’s plans to continue to raise rates in an effort to bring down inflation.”
“The labor market should still be characterised as tight, with the ratio of job openings to unemployed workers still elevated in August despite a small decline,” she added.
A day ahead of the monthly jobs report, the Labour Department released a separate report showing first-time claims for U.S. unemployment benefits rebounded by more than expected in the week ended October 1st.
The report said initial jobless claims climbed to 219,000, an increase of 29,000 from the previous week’s revised level of 190,000. Economists had expected jobless claims to inch up to 200,000 from the 193,000 originally reported for the previous week.
The revised figure for the previous week reflects the lowest number of jobless claims since the week ended April 23rd.
Interest rate-sensitive utilities and commercial real estate stocks turned in some of the market’s worst performances, with the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index plunging by 3.0 percent and 2.8 percent, respectively.
Substantial weakness was also visible among telecom stocks, as reflected by the 2.9 percent slump by the NYSE Arca North American Telecom Index. The index tumbled to its lowest closing level in over two years.
Banking stocks also showed a significant move to the downside on the day, dragging the KBW Bank Index down by 1.9 percent.
Steel, pharmaceutical and healthcare stocks also saw considerable weakness, while energy stocks bucked the downtrend amid a continued increase by the price of crude oil.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index advanced by 0.7 percent, while Hong Kong’s Hang Seng Index fell by 0.4 percent.
Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index dipped by 0.4 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both slid by 0.8 percent.
In the bond market, treasuries extended the sharp pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.7 basis points to 3.826 percent.
Trading on Friday is likely to be driven by reaction to the monthly jobs report and the impact on expectations for future rate hikes.