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U.S. Stocks Close Sharply Lower Following Late-Day Sell-Off

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April 04 2024 4:34PM

Stocks turned in a strong performance throughout much of the trading day on Thursday but came under substantial pressure in the latter part of the session. The major averages plummeted in the final two hours of trading, ending the day sharply lower.

The major averages saw continued weakness going into the close, finishing the session nearly their worst levels of the day. The Nasdaq (NASDAQI:COMP) tumbled 228.38 points or 1.4 percent to 16,049.08, while the S&P 500 (SPI:SP500) slumped 64.28 points or 1.2 percent to 5,147.21.

After surging nearly 300 points in early trading, the Dow (DOWI:DJI) plunged 530.16 points or 1.4 percent to 38,596.98, closing lower for the fourth straight session.

The late-day sell-off on Wall Street came amid a continued surge by the price of crude oil, which advanced for the fifth straight session and reached its highest levels since last October.

Crude for May delivery jumped $1.16 to $86.59 a barrel, raising concerns higher energy prices will keep inflation elevated and convince the Federal Reserve to hold off on lowering interest rates.

Earlier in the session, stocks benefited from a positive reaction to a Labor Department report showing first-time claims for U.S. unemployment benefits rose by more than expected in the week ended March 30th.

The report said initial jobless claims climbed to 221,000, an increase of 9,000 from the previous week’s revised level of 212,000.

Economists had expected jobless claims to inch up to 214,000 from the 210,000 originally reported for the previous week.

With the bigger than expected increase, jobless claims reached their highest level since hitting 225,000 in the week ended January 27th.

The advance by jobless claims generated some optimism about the outlook for interest rates, although the likelihood of a rate cut in June remains uncertain.

CME Group’s FedWatch Tool is currently indicating a 63.1 percent chance the Federal Reserve will cut rates by a quarter point in June but a 29.4 percent chance rates will remain unchanged.

Sector News

Semiconductor stocks moved sharply lower over the course of the session, dragging the Philadelphia Semiconductor Index down by 3.0 percent.

Shares of AI darling Nvidia (NASDAQ:NVDA) plunged by 3.4 percent after jumping as much as 1.9 percent early in the trading day.

Considerable weakness also emerged among housing stocks, as reflected by the 1.6 percent loss posted by the Philadelphia Housing Sector Index.

Gold stocks also saw significant weakness as the price of the precious metal snapped a seven-session winning streak, with the NYSE Arca Gold Bugs Index falling by 1.6 percent.

Computer hardware, brokerage and healthcare stocks also came under pressure as the day progressed, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, with markets in China and Hong Kong closed for a holiday. Japan’s Nikkei 225 Index advanced by 0.8 percent, while South Korea’s Kospi jumped by 1.3 percent.

Most European stocks also moved to the upside on the day. The U.K.’s FTSE 100 Index climbed by 0.5 percent and the German DAX Index rose by 0.2 percent, although the French CAC 40 Index closed just below the unchanged line.

In the bond market, treasuries fluctuated over the course of the session before closing firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.6 basis points to 4.309 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the monthly jobs report and its impact on the outlook for interest rates.

Economists currently expected employment to jump by 200,000 jobs in March after surging by 275,000 jobs in February, while the unemployment rate is expected to hold at 3.9 percent.