Chicago, IL 10/6/2011 (PennyPayDay) – After moving sharply higher in the two previous sessions, stocks are giving back some ground in early trading on Thursday. The major averages have moved to the downside, although selling pressure has remained relatively subdued.
Currently, the major averages are posting modest losses, off their lows for the young session. The Dow is down 58.35 points or 0.5 percent at 10,881.60, the Nasdaq is down 5.81 points or 0.2 percent at 2,454.70 and the S&P 500 is down 5.74 points or 0.5 percent at 1,138.30.
While optimism about the financial situation in Europe had generated some positive sentiment before the start of trading, the buying interest was partly offset by news that the European Central Bank left interest rates unchanged, disappointing some investors that had been hoping for a rate cut.
The pullback by the markets also comes on the heels of disappointing comments from ECB President Jean-Claude Trichet, who noted that the economic outlook remains subject to particularly high uncertainty and intensified downside risks.
Peter Boockvar, equity strategist at Miller Tabak, said, "As expected but disappointing to some ,the ECB left interest rates unchanged at 1.5% as Trichet's last meeting highlights their sole mandate of price stability."
"While the markets are unhappy with the lack of a rate cut, Trichet's swan song as head of the ECB was going to replicate what the German Bundesbank would have done, and in light of still cheap money relative to inflation, it would have been nothing," he added.
In U.S. economic news, the Labor Department released a report showing a modest increase in initial jobless claims in the week ended October 1st, with claims climbing back above the 400,000 level.
The report showed that jobless claims rose to 401,000 from the previous week's revised figure of 395,000. Economists had expected jobless claims to increase to 410,000 from the 391,000 originally reported for the previous week.
Financial stocks have helped to lead the markets lower in early trading, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index both falling by 1.7 percent.
Oil, gold, and natural gas stocks have also moved to the downside, reflecting weakness in the broader resource sector. Most of the other major sectors are showing more modest moves.
In overseas trading, stock markets across the Asia-Pacific region saw considerable strength, benefiting from the rally seen on Wall Street overnight. Japan's Nikkei 225 Index rose by 1.7 percent, while Hong Kong's Hang Seng Index surged up by 5.7 percent.
The major European markets are also showing notable moves to the upside on the day. The U.K.'s FTSE 100 Index is jumping by 2.2 percent, while the French CAC 40 Index and the German DAX Index are advancing by 1.8 percent and 1.5 percent, respectively.
In the bond market, treasuries are seeing modest weakness, extending the downward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.2 basis points at 1.927 percent.