(RTTNews) - After showing a steep decline in early trading in Thursday, stocks have regained some ground over the course of the morning but remain mostly negative. The initial weakness followed the release of some disappointing economic news combined with some quarterly results that failed to impress investors.

On the economic front, a report from the Labor Department showed that first-time claims for unemployment benefits unexpectedly jumped to their highest level in over twenty-six years in the week ended January 31st.

The report showed that initial jobless claims rose to 626,000 from the previous week’s revised figure of 591,000. Economists had expected jobless claims to edge down to 580,000 from the 588,000 originally reported for the previous week.

Still, a number of traders are likely to be looking ahead to the release of the Labor Department’s monthly employment report on Friday. Economists anticipate a loss of more than 500,000 jobs and an unemployment rate of 7.5 percent.

In other economic news, a separate Labor Department report showed that non-farm labor productivity jumped 3.2 percent in the fourth quarter following a revised 1.5 percent increase in the third quarter. While productivity increased by much more than expected, both output and hours worked showed notable declines.

Meanwhile, the Commerce Department’s monthly report on factory orders was released shortly after the market open and showed a bigger than expected 3.9 percent decrease in orders in December. This marked the fifth consecutive monthly decrease in orders.

In corporate news, Cisco Systems, Inc. (CSCO) reported better than expected earnings and revenue figures for the second quarter, but disappointing sales guidance for the current quarter has led to a notable decline in the value of the stock.

Additionally, Western Union Co. (WU) is under pressure after its quarterly results showed revenue that failed to meet expectations, even though its earnings per share figure beat what analysts had anticipated.

Not all the earnings news was bad, however, with shares of Cigna (CI) moving higher after the health insurer reported adjusted fourth quarter earnings that exceeded analyst estimates.

The major averages have moved back to the downside in recent trading, although they remain off their worst levels of the day. The Dow is currently down 108.96 at 7,847.70, the Nasdaq is down 7.89 at 1,507.16 and the S&P 500 is down 9.80 at 822.43.

Sector News

As weakness plagues the broader markets during mid-morning trading on Thursday, a majority of the major sectors indices are posting notable losses on the day.

Stocks in the banking sector are suffering some of the worst performances of the day. A 4.7 percent decline by the Kbw Bank Index is illustrating the weakness in the sector. With the decline, the index has fallen to its lowest level since the index’s inception.

Within the sector, Bank of America (BAC) is posting one of the widest losses, down 14.9 percent so far. Wells Fargo (WFC) and Fifth Third Bancorp (FITB) are also under considerable pressure, falling down 13.5 percent and 10.4 percent, respectively.

Real estate, airline, and oil services stocks are also showing substantial declines. The Morgan Stanley REIT Index is down 4.2 percent, while the Amex Airline Index and Philadelphia Oil Service Index are down 2 percent and 1.3 percent, respectively.

While railroad and defense stocks are also seeing some weakness, health insurance and gold stocks are turning in some of the market’s best performances. The gains by gold stocks come as the price of the precious metal is up $20.80 at $923 an ounce.

Some strength has also emerged among semiconductor, healthcare provider, and brokerage stocks, helping to lift the major averages off their lows.

Stocks Driven By Analyst Comments

Textron (TXT) is suffering a loss of 13.2 percent after being downgraded to Neutral from Overweight at J.P. Morgan due to what analysts see as a deteriorating fundamental outlook. With the decline, the stock has fallen to its lowest level in about eighteen years.

Analysts explained that they see significant downside risk to estimates based on the lack of visibility for the future of Textron. Subsequently, they expect substantial losses through 2010 and a difficult liquidity situation. Furthermore, analysts reduced the price target to $5 from $19.

Additionally, Dell (DELL) is down 4.1 percent after being downgraded to Underweight from Neutral at J.P. Morgan as analysts expect continued weakness in PC sales, with unit counts falling 13.5 percent in 2009. Furthermore, the price target on the stock was cut to $8.50 from $12.

Meanwhile, Marvell Technology (MRVL) is posting a gain of 6 percent after the stock was upgraded to Buy from Neutral at Goldman Sachs based on analyst expectations for additional restructuring and a new financial model. The stock’s price target was raised to $10 from $6.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region fell Thursday on heightened worries that the recession may be deepening. Japan’s benchmark Nikkei 225 index fell 1.1 percent.

The major European markets are also seeing considerable weakness. The French CAC 40 Index and the German DAX Index are down 2.5 percent and 1.7 percent, respectively, while the U.K.’s FTSE 100 Index is suffering a loss of 1.8 percent.

In the bond market, treasuries are seeing some strength after trending lower in recent sessions. Subsequently, the yield on the benchmark yen-year note is down 3 basis points at 2.884 percent after ending Wednesday’s trading at a two-month closing high.

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

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