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Stocks Close Mixed On The Day But Sharply Higher In Q1 - U.S. Commentary

Stocks turned in a relatively lackluster performance on Friday, as traders expressed uncertainty about the outlook for the markets following the strong first quarter. A mixed batch of U.S. economic data also contributed to the choppy trading.

The major averages eventually ended the session mixed, with the tech-heavy Nasdaq posting a modest loss. While the Nasdaq edged down 3.79 points or 0.1 percent to 3,091.57, the Dow rose 66.22 points or 0.5 percent to 13,212.04 and the S&P 500 climbed 5.19 points or 0.4 percent at 1,408.47.

Despite the mixed performance on the day, the major averages all moved sharply higher for the first three months of the year. The Dow advanced by 8.1 percent for the quarter, while the Nasdaq and the S&P 500 surged up by 18.7 percent and 12 percent, respectively.

The choppy trading on the day came as traders seemed reluctant to make any significant moves on the heels of the release of a mixed batch of U.S. economic data.

Before the start of trading, the Commerce Department released a report showing a notable increase in personal spending in the month of February, although personal income rose by less than expected.

The report showed that personal spending rose by 0.8 percent in February following an upwardly revised 0.4 percent increase in January. Economists had expected spending to increase by 0.6 percent compared to the 0.2 percent growth that had been reported for the previous month.

Meanwhile, personal income edged up by 0.2 percent in February, matching the downwardly revised increase seen in the previous month. Personal income had been expected to increase by 0.4 percent.

A separate report from Reuters and the University of Michigan showed that consumer sentiment unexpectedly improved in the month of March.

The report showed that the consumer sentiment index for March was upwardly revised to a reading of 76.2 from the preliminary reading of 74.3. With the upward revision, the March reading is up from 75.3 in February and above economists' estimate of 75.0.

On the other hand, the Institute for Supply Management - Chicago released a report showing a slowdown in the pace of growth in regional business activity.

The ISM Chicago said its business barometer fell to 62.2 in March from 64.0 in February, although a reading above 50 still indicates an increase in business activity. Economists had expected the index to show a more modest drop to a reading of 63.0.

Among individual stocks, Research In Motion (RIMM) rose by 7.1 percent even though the BlackBerry maker reported weaker than expected fourth quarter results. The company also said it expects continued pressure on revenue and earnings throughout fiscal 2013.

Sector News

Most of the major sectors showed only modest moves on the day, contributing to the lackluster performance turned in by the broader markets.

Nonetheless, significant strength emerged among oil service stocks, as reflected by the 1.7 percent gain posted by the Philadelphia Oil Service Index. The strength in the oil service sector came as crude for May delivery edged up $0.24 to $103.02 a barrel.

Health insurance stocks also showed a strong move to the upside, driving the Morgan Stanley Healthcare Payor Index up by 1.7 percent to a new record closing high. Centene (CNC) and WellPoint (WLP) turned in two of the sector's best performances.

While gold, commercial real estate, and biotech stocks also saw notable strength, considerable weakness was visible among airline and housing stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index fell by 0.3 percent, China's Shanghai Composite Index ended the day up by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. The U.K.'s FTSE 100 Index rose by 0.5 percent, while the German DAX Index and the French CAC 40 Index advanced by 1 percent and 1.3 percent, respectively.

In the bond market, treasuries showed a notable move to the downside in afternoon trading, closing firmly in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.7 basis points to 2.216 percent.

Looking Ahead

Economic data is likely to be in focus next week, although the Labor Department's closely watched monthly employment report is due to be released while the U.S. stock markets are closed on Good Friday.

Reports on construction spending, factory orders, and manufacturing and service sector activity may attract some attention.

by RTTNews Staff Writer

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