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Stocks Close Nearly Flat After Lackluster Trading Day - U.S. Commentary

Stocks showed a lack of direction throughout the trading session on Friday, as traders seemed reluctant to make any significant moves following the recent rally. The markets eventually ended the choppy trading session nearly flat.

The major averages bounced back and forth across the unchanged line before finishing the session mixed. While the S&P 500 crept up 1.57 points or 0.1 percent to 1,404.17, the Dow slipped 20.14 points or 0.2 percent to 13,232.62 and the Nasdaq edged down 1.11 points or less than a tenth of a percent to 3,055.26.

Despite the mixed performance on the day, the major averages all showed strong upward moves for the week. The Dow and the S&P 500 both rose by 2.4 percent, while the Nasdaq climbed 2.2 percent.

The lackluster performance on Wall Street came as traders seemed to stay on the sidelines following the recent rally, which has driven the major averages to multi-year highs.

While stocks did not follow-through on the recent upward move, it is worth noting that traders did not cash in on the recent gains amid concerns about missing out on any further upside.

On the economic front, the Labor Department released a report showing a moderate increase in consumer prices in the month of February, with the increase reflecting a jump in energy prices.

The Labor Department said its consumer price index rose by 0.4 percent in February following a 0.2 percent increase in January. Economists had expected the index to increase by about 0.5 percent.

Excluding food and energy prices, the core consumer price index edged up by 0.1 percent in February compared to a 0.2 percent increase in the previous month. Core prices had been expected to increase by about 0.2 percent.

Separately, the Federal Reserve released a report showing that industrial production unexpectedly came in unchanged in the month of February, with a sharp drop in mining output offsetting continued growth in the manufacturing sector.

The report showed that industrial production was unchanged in February after rising by a revised 0.4 percent in January. Economist had expected production to increase by 0.5 percent after initial data showed that production was unchanged in the previous month.

Reuters and the University of Michigan also released their preliminary report on consumer sentiment in the month of March, showing an unexpected deterioration

The consumer sentiment index fell to 74.3 in March from 75.3 in February, surprising economists, who had expected the index to increase to 76.0.

Sector News

While most of the major sectors showed only modest moves, significant weakness was visible among airline stocks. Reflecting the weakness in the airline sector, the NYSE Arca Airline Index tumbled by 2.6 percent.

US Airways (LCC) and Delta (DAL) turned in two of the airline sector's worst performances, falling by 5.7 percent and 4.4 percent, respectively.

Housing stocks also showed a notable move to the downside on the day, dragging the Philadelphia Housing Sector Index down by 1.3 percent. The loss by the index came after it ended the previous session at a three-year closing high.

Meanwhile, oil service stocks saw considerable strength, resulting in a 2.9 percent gain by the Philadelphia Oil Service Index. The strength in the sector comes as crude for April delivery jumped $1.95 to $107.06 a barrel.

Significant strength also emerged among natural gas stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Natural Gas Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another lackluster performance on Friday, ending the day mixed. While Japan's Nikkei 225 Index edged up by 0.1 percent, Hong Kong's Hang Seng Index slipped 0.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. The German DAX Index edged up by 0.2 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index both ended the day up by 0.4 percent.

In the bond market, treasuries ended the day modestly lower but were well off their worst levels. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, closed up by 1.7 basis points at 2.298 percent after reaching a high of 2.363 percent.

Looking Ahead

Housing data is likely to be in focus next week, with traders likely to keep an eye on reports on homebuilder confidence, housing starts, and new and existing home sales.

On the earnings front, Oracle (ORCL), Adobe (ADBE), General Mills (GIS), Nike (NKE), and FedEx (FDX) are among the companies scheduled to release their quarterly results next week.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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