Dow, S&P 500 Close Modestly Lower After Reaching Record Intraday Highs

After seeing modest strength for much of the trading session, stocks came under pressure going into the close of trading on Thursday. The major averages pulled back well off their best levels of the day and into negative territory.

The major averages all finished the day moderately below the unchanged line. The Dow dipped 90.55 points or 0.3 percent to 36,398.08, the Nasdaq edged down 24.65 points or 0.2 percent to 15,471.56 and the S&P 500 slipped 14.33 points or 0.3 percent to 4,778.73.

The late-day pullback on Wall Street may partly have reflected profit taking after the Dow and the S&P 500 reached new record intraday highs in early trading.

Stocks initially benefited from recent upward momentum, which has helped the markets largely offset the pullback seen in reaction to initial reports about the Omicron variant of the coronavirus.

With early indications that the Omicron variant causes milder symptoms, traders seem optimistic the new strain will not detail the economic recovery.

Trading activity remained somewhat subdued, however, as some traders looked to get a head start on New Year’s festivities.

In U.S. economic news, the Labor Department released a report unexpectedly showing a modest drop in first-time claims for U.S. unemployment benefits in the week ended December 25th.

The report said initial jobless claims dipped to 198,000, a decrease of 8,000 from the previous week’s revised level of 206,000.

The slight pullback surprised economists, who had expected jobless claims to inch up to 208,000 from the 205,000 originally reported for the previous week.

A separate report from MNI Indicators growth in Chicago-area business activity picked back up in the month of December.

MNI Indicators said its Chicago business barometer rose to 63.1 in December from 61.8 in November, with a reading above 50 indicating growth. Economists had expected the business barometer to inch up to 62.0.

Sector News

Natural gas stocks showed a significant move to the downside on the day, dragging the NYSE Arca Natural Gas Index down by 1.3 percent.

The weakness among natural gas stocks came amid a steep drop by the price of the commodity, with natural gas for February delivery plunging $0.289 or 7.5 percent to $3.561 per million BTUs.

Considerable weakness also emerged among semiconductor stocks, as reflected by the 1.2 percent drop by the Philadelphia Semiconductor Index.

Networking stocks also showed a notable move to the downside, while strength remained visible among gold and tobacco stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index rose by 0.6 percent.

The major European markets also turned mixed on the day. While the U.K.’s FTSE 100 Index edged down by 0.2 percent, the French CAC 40 Index and the German DAX Index both crept up by 0.2 percent.

In the bond market, treasuries moved to the upside after showing a lack of direction early in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 1.515 percent.

Looking Ahead

Most overseas markets will be closed on Friday, potentially leading to light trading activity on Wall Street amid a lack of major U.S. economic data.

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