Materials and financial stocks led the losses
U.S. stocks pared earlier losses but ended in negative territory on Thursday, 09 June 2016, snapping a three-day win streak as oil futures pulled back from 10-month highs. Equity indices faced some early selling pressure as market participants were reminded about the presence of global growth concerns after the Bank of Korea unexpectedly lowered its key interest rate to 1.25% from 1.50% and China reported a 0.5% month-over-month decline in CPI (expected -0.2%). Markets in China and Hong Kong could not respond to the weak inflation data due to holiday closures, but the commodity market appeared to take notice as copper and crude oil retreated.
The Dow Jones Industrial Average slipped 19.86 points, or 0.1%, to close at 17,985.19, after being down by as many as 89 points earlier in the session.
The Nasdaq Composite Index declined 16.03 points, or 0.3%, to finish at 4,958.62. Earlier, the index was down by 34 points. The S&P 500 declined 3.64 points, or 0.2%, to close at 2,115.48,
Seven out of the index's 10 sectors finished lower, with consumer staples, telecoms and utilities showing slight gains. Materials and financial stocks led the losses. Shares of American Express, Caterpillar and Goldman Sachs Group led blue chips lower.
Market reaction to initial jobless claims was muted as a weekly tally of those seeking first-time unemployment benefits pointed to low levels of layoffs even as other data showed hiring slowed in recent months. On Thursday, the dollar index edged up by 0.4% as a report showed a small drop in weekly jobless benefits claims. Initial jobless claims fell to 264,000 in early June, providing some evidence that the labor market isn't entirely unraveling after that disappointing report last Friday indicated that just 38,000 jobs were created in May, well below expectations. Continuing claims for the week ending May 28 decreased by 77,000 to 2.095 million. That is the lowest level of continuing claims since October 21, 2000, lowering the four-week moving average for this series to 2.145 million from 2.163 million
The U.S. ICE Dollar Index trades around 1.9% lower month to date in the wake of a weaker-than-expected snapshot of labor markets issued last week. A weaker greenback makes dollar-priced assets including precious metals cheaper, therefore more attractive.
Other economic data included Wholesale Inventories. Wholesale inventories increased 0.6% in April (consensus +0.1%) after increasing an upwardly revised 0.2% (from 0.1%) in March. The increase in April was fueled by a 1.3% increase in nondurable inventories, which was powered by a 2.2% increase in drug inventories and a 7.5% jump in farm products inventories. Wholesale sales increased 1.0% following a downwardly revised 0.6% increase (from 0.7%) in March.
Crude oil prices finished lower on Thursday, 09 June 2016 at Nymex after hitting their highest levels in almost 11 months, buoyed by global production disruptions and falling U.S. crude inventories. After a three-session climb to the highest level in almost 11 months, oil futures pulled back on Thursday as some analysts raised concerns that the recent price rally would prompt higher production.
July West Texas Intermediate crude shed 67 cents, or 1.3%, to end at $50.56 a barrel on the New York Mercantile Exchange. August Brent crude lost 56 cents, or 1.1%, to $51.95 a barrel after finishing Wednesday at $52.51, the highest futures settlement since October.
Bullion prices settled higher at Comex on Thursday, 09 June 2016. Gold futures climbed on Thursday to settle at their highest levels since mid-May, finding support from expectations the Federal Reserve will keep U.S. interest rates on hold in the coming months. The possibility that the United Kingdom may leave the European Union, inviting global market and economic volatility, also bolstered the yellow metal.
August gold rose $10.40, or 0.8%, to settle at $1,272.70 an ounce. July silver tacked on 28.3 cents, or 1.7%, to $17.268 an ounce Thursday.
Financial markets are pricing in slim odds that the Fed will raise rates at a meeting that wraps 15 June or when it next meets again in July. This low-rate view has boosted the appeal of assets that don't bear interest, including precious metals.
Treasuries finished the day near their highs despite the intraday rebound in equities with the 10-yr yield sliding two basis points to 1.68%. On a related note, demand for Germany's 10-yr bund pressured its yield to a record low of 0.026% before ending flat at 0.037%.
Today's participation was below average as fewer than 800 million shares changed hands at the NYSE floor.
Tomorrow's economic data will be limited to the preliminary reading of the Michigan Sentiment Index for June (consensus 94.0) and the May Treasury Budget. The two reports will be released at 10:00 ET and 14:00 ET, respectively.
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