Stocks saw moderate weakness for much of the trading session on Thursday before accelerating to the downside going into the close. The major averages all moved sharply lower, extending the pullback seen in the previous session.
The major averages ended the session at their worst levels of the day. The Dow plunged 550.46 points or 1.6 percent at 34,678.35, the Nasdaq tumbled 221.76 points or 1.5 percent to 14,220.52 and the S&P 500 slumped 72.04 points or 1.6 percent to 4,530.41.
The early weakness on Wall Street came as some traders continued to cash in on recent strength in the markets, which lifted the Nasdaq and the S&P 500 to their best closing levels in well over two months on Tuesday.
Selling pressure picked up considerably in the final hour of the last trading day of the quarter, which marked the first negative quarter for the major averages since the first quarter of 2020.
For the first three months of 2022, the Nasdaq plummeted by 9.1 percent and the S&P 500 and Dow dove by 4.9 percent and 4.6 percent, respectively, although the major averages regained some ground in March.
Traders may also have been looking to safer havens ahead of the release of the Labor Department’s closely watched monthly employment report on Friday.
Economists currently expect the report to show employment jumped by 490,000 jobs in March after surging by 678,000 jobs in February. The unemployment rate is expected to edge down to 3.7 percent from 3.8 percent.
The jobs data could impact expectations regarding how quickly the Federal Reserve plans to raise interest rates in the months ahead.
A day ahead of the release of the closely watched monthly jobs report, the Labor Department released a report on Thursday showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended March 26th.
The report showed initial jobless claims edged up to 202,000, an increase of 14,000 from the previous week’s revised level of 188,000.
Economists had expected jobless claims to inch up to 197,000 from the 187,000 originally reported for the previous week.
A separate report from the Commerce Department said a reading on inflation thought to be preferred by the Federal Reserve showed the annual rate of core consumer price growth accelerated to 5.4 percent in February from 5.2 percent in January.
While the annual rate of growth reached its highest level since April 1983, the jump was slightly smaller than the 5.5 percent expected by economists.
Housing stocks moved sharply lower over the course of the session, dragging the Philadelphia Housing Sector Index down by 3.5 percent to its lowest closing level in over a year.
The sell-off by housing stocks came as Freddie Mac said the 30-year fixed-rate mortgage averaged 4.67 percent in the week ended March 31st, the highest since December 2018.
Substantial weakness was also visible among computer hardware stocks, as reflected by the 3.2 percent slump by the NYSE Arca Computer Hardware Index.
Dell (DELL) and HP Inc. (HPQ) posted steep losses after Morgan Stanley downgraded both computer equipment makers.
Financial stocks also moved notably lower along with bond yields, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index tumbling by 3.1 percent and 2.5 percent, respectively.
Semiconductor, retail and transportation stocks also saw considerable weakness on the day, reflecting the broad based selling pressure that emerged late in the session.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slid by 0.7 percent, while China’s Shanghai Composite Index fell by 0.4 percent.
The major European markets also moved to the downside on the day. While the U.K.’s FTSE 100 Index declined by 0.8 percent, the French CAC 40 Index and the German DAX Index slumped by 1.2 percent and 1.3 percent, respectively.
In the bond market, treasuries extended the rebound seen over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.1 basis points to 2.327 percent.
The monthly jobs report is likely to be in the spotlight on Friday, overshadowing reports on manufacturing activity and construction spending.
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