(RTTNews) - After showing a lack of direction for much of the trading session, stocks show a notable move to the downside in late day trading on Thursday. The major averages all moved firmly into negative territory, with the Dow ending the session at its worst closing level since October of 2002.

The choppy trading seen for much of the session came as traders digested another slew of economic news along with some mixed corporate news.

On the economic front, the Philadelphia Federal Reserve said its index of activity in the manufacturing sector fell to a negative 41.3 in February, its lowest reading since October of 1990. Economists expected the index to edge down to a negative 25.0.

Separately, a report from the Labor Department showed that initial jobless claims for the week ended February 14th came in at 627,000, unchanged from the revised figure for the previous week and moderately higher than the 620,000 that was expected by analysts.

Producer prices increased by much more than economists had been expecting in the month of January, according to a separate report released by the Labor Department, with the increase partly due to a modest rebound in energy prices.

Meanwhile, communication services provider Sprint Nextel (S) moved sharply higher after reporting a smaller than expected fourth quarter loss and saying it expects that its total subscriber losses will improve in 2009.

On the other hand, Dow component Hewlett-Packard (HPQ) showed a steep decline after the PC maker reported a notable decrease in fourth quarter earnings and provided disappointing guidance.

In other news, the Securities and Exchange Commission named Robert Khuzami to replace Linda Thomsen as the organization’s Director of the Division of Enforcement.

The announcement came less than two weeks after Thomsen announced her resignation in the midst of a flood of scandals that occurred under her watch, including the alleged $50 billion Ponzi scheme operated by Bernard Madoff.

The major averages staged a failed recovery attempt going into the close, ending the session sharply lower. The Dow closed down 89.68 points or 1.2 percent at 7,465.95, the Nasdaq closed down 25.15 points or 1.7 percent at 1,442.82 and the S&P 500 closed down 9.48 points or 1.2 percent at 778.94.

Sector News

Some of the worst losses came out of the banking sector, as reflected by the 6.8 percent decline shown by the KBW Bank Index, which ended the session at its worst closing level in over ten years. The weakness among banking stocks reflected continued concerns about the outlook for the sector.

Housing stocks also posted significant losses on the day, driving the Philadelphia Housing Index down 6.2 percent. The weakness in the housing sector came as investors made it clear that they do not expect President Obama’s plan to repair the housing market to work in the near future.

Additionally, computer hardware stocks also came under considerable selling pressure, as investors pulled out of the sector in response to the disappointing quarterly results from Hewlett-Packard.

Significant weakness also emerged among semiconductor, real estate, and railroad stocks, further contributing to the pullback by the broader markets.

At the other end of the spectrum, oil service stocks held onto strong gains amid an increase by the price of oil. The Philadelphia Oil Services Index subsequently ended the session up 2.1 percent.

Additionally, with the strength shown by Sprint Nextel, which closed up 19.9 percent on the day following its quarterly release, telecom stocks climbed notably throughout the session. The Amex North American Telecommunication Index ultimately closed up 1 percent on the day.

Dow Components

With banking stocks suffering considerable weakness on the day, Bank of America (BAC) and Citigroup (C) led the decline in the Dow for much of the day.

By the market close, Bank of American and Citigroup were down 14 percent and 13.8 percent, respectively. With the decline, Citigroup extended some recent losses and ended the session at its lowest closing level in decades.

Yet another poor performance within the Dow was shown by Hewlett-Packard, which closed down 7.9 percent after the release of its quarterly results.

The company reported that its first quarter profit fell 13 percent from last year amid sharp revenue drops in its PC, printer and server businesses. HP also forecast second quarter earnings below analysts’ current consensus estimate and lowered its earnings outlook for fiscal year 2009.

American Express (AXP), Intel (INTC), and Caterpillar (CAT) also posted noteworthy losses on the day, closing down 8.7 percent, 5.1 percent, and 5 percent, respectively.

Meanwhile, Home Depot (HD), Coca-Cola (KO), and AT&T (T) helped to limit the downside for the blue chip average, closing with gains of 1.8 percent, 1.5 percent, and 1 percent, respectively.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region ended Thursday’s trading higher after trending lower in recent sessions. Japan’s benchmark Nikkei 225 Index closed up 0.3 percent, bouncing off a nearly four-month closing low.

Meanwhile, the major European markets ended the trading day mixed. While the French CAC 40 Index closed modestly lower, the U.K.’s FTSE 100 Index and the German DAX Index finished the session up 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries saw notable weakness, as the Treasury announced a record auction of $94 billion in government debt next week. Subsequently, the yield on the benchmark ten-year note ended the trading day up 12.9 basis points at 2.857 percent.

Looking Ahead

On the economic front, trading on Friday may be impacted by the Labor Department’s monthly report on consumer prices. The report is expected to show an increase in consumer prices over the previous month but a decline in the year-over-year measure.

In corporate news, Crocs (CROX), GFI Group (GFIG), and Tesoro (TSO) are expected to release quarterly results following the closing bell on Thursday, while quarterly results from Barrick Gold (ABX), J.C. Penney (JCP), and Lowe’s (LOW) are all due out before the markets open on Friday.

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

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