U.S. Stocks Regain Ground After Early Move To The Downside

After coming under pressure early in the session, stocks have regained ground over the course of morning trading on Thursday. The major averages have climbed well off their lows of the session, with the tech-heavy Nasdaq bouncing into positive territory.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 33.13 points or 0.3 percent at 11,397.37, the Dow is down 84.84 points or 0.3 percent at 31,749.27 and the S&P 500 is down 5.99 points or 0.2 percent at 3,929.19.

Worries about the Federal Reserve aggressively raising interest rates in an effort to combat elevated inflation contributed to the initial weakness on Wall Street.

Traders have recently expressed concerns more aggressive moves by the Fed and other central banks could lead to a period of stagflation or an outright recession.

Adding to the worries, the Labor Department released a report this morning showing the annual rate of producer price growth slowed by less than expected in the month of April.

The report showed the annual rate of growth in producer prices slowed to 11.0 percent in April from a record high 11.5 percent in March, although economists had expected a bigger slowdown to 10.7 percent.

Core producer prices, which exclude prices for food, energy and trade services, were up by 6.9 percent compared to a year ago, reflecting a modest slowdown from the 7.1 percent spike seen in the previous month.

Selling pressure waned shortly after the start of trading, however, as some traders believe the recent sell-off in the markets has been overdone.

Bargain hunting has likely contributed to the subsequent recovery attempt by the markets, with the major averages rebounding after once again hitting their lowest intraday levels in over a year.

Gold stocks are seeing significant weakness in morning trading, with the NYSE Arca Gold Bugs Index tumbling by 2.6 percent to its lowest intraday level in over three months.

The weakness among gold stocks comes as the price of gold for June delivery is falling $14.60 to $1,839.10 an ounce.

Despite an increase by the price of crude oil, energy stocks have also moved to the downside, dragging the Philadelphia Oil Service Index and the NYSE Arca Oil Index down by 1.8 percent and 1.5 percent, respectively.

On the other hand, housing stocks have moved sharply higher on the day, driving the Philadelphia Housing Sector Index up by 2.3 percent. The index is rebounding after ending the previous session at its lowest closing level in over a year.

Retail stocks are also regaining ground, with the Dow Jones U.S. Retail Index jumping by 1.9 percent after ending the previous session at a one-year closing low.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Thursday. Japan’s Nikkei 225 Index dove by 1.8 percent, while Hong Kong’s Hang Seng Index plummeted by 2.2 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index is down by 1.6 percent, the French CAC 40 Index is down by 1.2 percent and the German DAX Index is down by 0.9 percent.

In the bond market, treasuries are extending the upward move 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 5.7 basis points at 2.864 percent.

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