Stocks have moved sharply lower over the course of the trading day on Thursday after turning in a lackluster performance over the three previous sessions. Uncertainty about a speech by Federal Reserve Chairman Ben Bernanke is contributing to the weakness on Wall Street.
The major averages have climbed well off their worst levels of the day but remain firmly in negative territory. The Dow is down 98.33 points or 0.8 percent at 13,009.15, the Nasdaq is down 29.17 points or 1 percent at 3,052.02 and the S&P 500 is down 10.38 points or 0.7 percent at 1,400.11.
The weakness on Wall Street comes as traders express caution ahead of Bernanke's speech to the Kansas City Fed's Jackson Hole symposium on Friday, with some traders looking to safe havens ahead of the Fed Chief's remarks.
Many traders expect Bernanke to make comments indicating whether the central bank will engage in another round of quantitative easing.
A research note from Capital Economics said, "Given the unexpectedly strong signal in the minutes of the latest FOMC meeting that QE3 is coming fairly soon, we expect that Fed Chairman Ben Bernanke will reinforce the case for more action in his speech at Jackson Hole."
"Although a few of the non-voting regional Fed Presidents still appear to have reservations, we doubt that the slight uptick in the incoming economic data in the past couple of weeks will have softened Bernanke's resolve," the note added.
Further selling pressure was generated by a report from Bloomberg News indicating that Spanish Prime Minister Mariano Rajoy said his government will delay deciding whether to seek a sovereign bailout until the aid conditions are clear.
Traders are also digesting the latest batch of U.S. economic data, including a report from the Labor Department showing that jobless claims unexpectedly came in unchanged in the week ended August 25th.
The report said initial jobless claims came in at 374,000, unchanged compared to the previous week's revised figure. Economists had expected jobless claims to edge down to 370,000 from the 372,000 originally reported for the previous week.
A separate report from the Commerce Department showed that personal income rose by 0.3 percent in July, matching the increases seen in the two previous months. The increase also came in line with economist estimates.
The report also showed that personal spending increased by 0.4 percent in July after coming in flat in June. The spending growth also matched the expectations of economists.
Networking stocks are seeing substantial weakness in mid-day trading, with the NYSE Arca Networking Index down by 3.3 percent. The loss by the index comes after it ended the previous session at its best closing level in over two months.
Ciena (CIEN) is leading the networking sector lower after reporting a wider than expected third quarter loss and providing disappointing guidance. Shares of Ciena have tumbled by 17.6 percent on the news.
Considerable weakness is also visible among electronic storage stocks, as reflected by the 2.4 percent loss being posted by the NYSE Arca Disk Drive Index. Seagate Technology (STX) and Western Digital (WDC) are turning in two of the sector's worst performances.
Steel stocks have also shown a significant move to the downside, dragging the NYSE Arca Steel Index down by 1.9 percent. Oil service, semiconductor, and telecom stocks are also under pressure amid broad based weakness in the markets.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index dropped by 1 percent, while Hong Kong's Hang Seng Index ended the day down by 1.2 percent.
The major European markets also moved to the downside on the day. While the German DAX Index tumbled by 1.6 percent, the French CAC 40 Index fell by 1 percent, and the U.K.'s FTSE 100 Index slid by 0.4 percent.
In the bond market, treasuries have moved moderately higher amid optimism about further bond purchases by the Fed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.7 basis points at 1.627 percent. (RTTNews)
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