(RTTNews) - After falling sharply in the previous session, the U.S. stock markets have experienced substantial volatility over the course of the trading day on Thursday. The choppy trading comes on the heels of the release of a slew of economic data.

Stocks initially saw some strength following the release of a Labor Department report showing a continued decrease in weekly initial jobless claims. Some tame consumer price inflation data also contributed to the early strength.

The markets were unable to sustain the early upward move, however, and stocks pulled back sharply after the Philadelphia Federal Reserve released a report showing a substantial contraction in manufacturing activity.

The Philly Fed said its regional index of manufacturing activity fell to a negative 37.5 in October from a positive 3.8 in September, with a negative reading indicating a contraction in the sector. Economists had been expecting the index to show a reading of negative 5.0.

The decrease marked the index’s largest one-month decline ever, dragging it to its lowest level since October of 1990. The Philly Fed noted that the weakness came amid the turmoil that has been seen in the financial markets over the past few weeks.

The Philly Fed said that the special questions portion of its survey revealed that nearly 14 percent of firms had experienced problems obtaining credit to finance ongoing activities. Additionally, 30 percent of firms indicated that their customers were having such problems.

With the downward move, the major averages all more than offset Monday’s standout gains, although they remained well off the five-year intraday lows set last Friday. Nonetheless, the markets have staged a substantial recovery since then.

The volatility in the markets is reflected by the performance of the CBOE’s VIX Volatility Index, which is currently up 9.5 percent. At its high for the session, the index was at a record intraday high, although it has given back some ground since then.

The major averages have moved sharply higher in recent trading, surging back above the unchanged line. The Dow is currently up 71.21 at 8,649.12, the Nasdaq is up 34.79 at 1,663.12 and the S&P 500 is up 6.73 at 914.57.

Sector News

Substantial strength among airline stocks is contributing to the recovery by the broader markets, with the Amex Airline Index currently up 10 percent. With the gain, the index has more than offset the losses that it posted in the two previous sessions.

The strength in the oil-sensitive airline sector is partly due to a steep decline by the price of oil, which hit a low below $70 a barrel earlier in the session. Crude for November delivery is currently down $3.22 at $71.32 a barrel.

Natural gas stocks are also posting strong gains in early afternoon trading, resulting in a 4.1 percent gain by the Amex Natural Gas Index. Questar (STR) and Noble Energy (NBL) are turning in two of the sector’s best performances.

A variety of other sectors are also moving back to the upside, with significant strength visible among telecommunications, software, and retail stocks.

Meanwhile, gold stocks continue to see substantial losses and remain some of the worst performers of the day. The weakness among gold stocks comes amid a steep drop by the price of the precious metal, with gold for December delivery currently down $35.40 at $803.60 an ounce.

Steep losses by Kinross Gold (KGC), Goldcorp (GG), and Agnico-Eagle Mines (AEM) are contributing to a 9.1 percent decline by the Amex Gold Bugs Index. The loss extends a recent downtrend by the index, which hit a three-year intraday low at its worst level of the day.

Housing stocks are also showing wide losses on the day as investors continue to express concerns about the outlook for the housing market. Currently, the Philadelphia Housing Index is showing a loss of 2.3 percent after hitting a record intraday low.

Significant weakness also remains in a number of sectors, including the oil service, banking, and disk drive sectors.

Stocks In The News

Among individual stocks, shares of CIT Group (CIT) are seeing substantial weakness, with the financial services company currently down 18.8 percent. At its low for the session, CIT Group was at a record intraday low.

The loss by CIT Group comes after the company reported a third quarter loss of $1.11 per share compared to a year-ago loss of $0.24 per share. The company also said it wrote down $455 million of goodwill before taxes related to its vendor-finance business.

Shares of MetLife (MET) have also come under pressure after the insurer said it completed the sale of 86.25 million shares of its common stock for of approximately $2.3 billion. MetLife is currently down 6.4 percent, although it remains off the five-year low it set last Wednesday.

On the other hand, shares of Steel Dynamics (STLD) are currently up 15 percent after the steel producer reported strong third quarter earnings growth. At the same time, the company withdrew its full year earnings guidance.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region came under pressure on Thursday, adding to the losses posted in the previous session. Japan’s benchmark Nikkei 225 Index showed a notable decline, closing down 11.4 percent.

European stocks also ended the day significantly lower, with the markets pulling back sharply going into the close. The French CAC 40 Index and the German DAX Index closed down 5.9 percent and 4.9 percent, respectively, while the U.K.’s FTSE 100 Index fell 5.4 percent.

Meanwhile, treasuries are seeing continued strength in early afternoon trading, although they have moved off their highs for the session. Subsequently, the yield on the benchmark ten-year note is currently down 4.6 basis point at 3.965 percent after hitting a low of 3.918 percent.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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