(RTTNews) - Stocks are seeing considerable weakness in mid-afternoon trading on Thursday following a rebound off their intraday lows during earlier trading. The initial weakness of the day came as investors responded negatively to some mixed economic news.

In an interview with RTT News, Craig Peckham, equity trading strategist with Jefferies & Company attributed the weakness to “skepticism on the back of the treasury rescue plan” and uncertainty surrounding the compromise stimulus package.

Peckham added the market’s behavior is typical of a “grinding bear market.”

On the economic front, the Labor Department said initial jobless claims in the week ended February 7 fell to 623,000 from the previous week’s revised figure of 631,000. Economists had been expecting claims to fall to 610,000 from the 626,000 originally reported for the previous week.

The report also showed that the four-week moving average rose to 607,500 from the previous week’s revised average of 583,500, while continuing claims in the week ended January 31 rose to another new record high of 4.810 million.

Meanwhile, retail sales for January showed an unexpected increase in for the month, according to the monthly Commerce Department report.

Retail sales rose 1.0 percent in January following a revised 3.0 percent decline in December. Economists had expected sales to fall by 0.8 percent compared to the 2.7 percent decrease originally reported for the previous month.

The increase came as a surprise, although the growth was due, at least in part, to the significant discounts given by retailers following the weak holiday shopping season.

Excluding sales of motor vehicles and parts, retail sales increased by only slightly less, climbing 0.9 percent in January compared to a 3.2 percent decrease in the previous month. Economists had expected the ex-auto sales figure to fall 0.4 percent.

The weakness in the markets also comes as some traders are now looking beyond the proposed economic stimulus bill and expressing continued concerns about the efficacy of the Obama administration’s proposed financial rescue plan.

Traders continue to wait for the details of the proposed plan after Treasury Secretary Timothy Geithner’s broad outline of the plan contributed to a sell-off on Wall Street on Tuesday.

In recent trading, the major averages have continued to show notable weakness but are holding off their lows of the day. Following a brief stint in positive territory, the Nasdaq is down 13.70 at 1.516.80, while the Dow is down 157.94 at 7,781.59 and the S&P 500 is down 16.10 at 817.64.

Dow Components

While a vast majority of the Dow components are in negative territory, contributing to the steep loss by the blue chip index, Coca-Cola (KO) is bucking the downtrend after reporting impressive quarterly results.

Shares of Coca-Cola are currently up 6.3 percent on the day, climbing off of the two and a half year closing low set on Tuesday. The advance comes following the release of the company’s fourth quarter results that included better-than-expected adjusted earnings per share figure.

Meanwhile, as with the broader markets, some of the worst performances in the Dow are being shown by financial stocks, with Bank of America (BAC), JP Morgan (JPM), and American Express (AXP) posting steep losses.

Bank of America is currently down 9.6 percent on the day after posting a solid gain in the previous session. Similarly, JP Morgan and American Express are both down 5.7 percent.

Citigroup (C), Alcoa (AA), General Motors (GM) and General Electric (GE) are also showing notable losses.

Citigroup is down 7 percent on the day following the trend in the financial sector. The losses by Alcoa, GM, and GE are more modest.

Sector News

As mentioned above, some of the worst performances of the day are coming out of the banking sector as investors avoid buying into the sector before more details are released regarding the financial bailout plan.

The weakness in the banking sector is reflected by the 10.7 percent loss being shown by the S&P Banks Index, which has fallen to a level that, if closed at, would mark its lowest closing level since the index’s inception over a decade ago.

Real estate, housing, and railroad stocks are also showing noteworthy losses. The Morgan Stanley REIT Index is down 6.6 percent, while the Philadelphia Housing Index and the Dow Jones Railroads Index are down 5.5 percent and 5.1 percent, respectively.

At the other end of the spectrum, computer hardware and biotechnology stocks are some of the only notable gainers on the day, with the Amex Computer Hardware Index up 2 percent and the Amex Biotechnology Index up 1.1 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed posting noteworthy losses on Thursday, with Japan’s benchmark Nikkei 225 Index ending the session down 3 percent.

The major European markets also ended the trading session notably lower, with the U.K.’s FTSE 100 Index closing down 0.8 percent, while the French CAC 40 Index and the German DAX Index fell 2.1 percent and 2.7 percent, respectively.

In the bond markets, treasuries are hovering near the unchanged line, showing considerable uncertainty. Currently, the yield on the 10-year note is down less than a basis point at 2.755 percent.

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

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