Stocks showed a lack of direction over the course of the trading day on Thursday, as traders seemed reluctant to make any significant moves. The choppy trading came after the markets saw considerable volatility over the course of the two previous sessions.
The major averages bounced back and forth across the unchanged line, eventually ending the session mixed. While the Nasdaq fell 10.74 points or 0.4 percent to 2,839.38, the Dow rose 33.60 points or 0.3 percent to 12,529.75 and the S&P 500 edged up 1.82 points or 0.1 percent to 1,320.68.
The lackluster performance on Wall Street came as traders expressed uncertainty about the near-term outlook for the markets following the sell-off seen earlier this month.
While some analysts have described the markets as oversold in light of the recent weakness, traders appear reluctant to go bargain hunting amid continued concerns about the financial situation in Europe.
Traders also digested some uninspiring U.S. economic data, including a report from the Commerce Department showing a drop by a key indicator of business spending.
The Commerce Department said orders for non-defense capital goods excluding aircraft, which are seen as an indicator of capital spending, fell by 1.9 percent in April following a 2.2 percent drop in March.
Jennifer Lee, senior economist at BMO Capital Markets, said, "We haven't seen two straight months of declines for over a year, a negative development for equipment & spending in the latter half of this year."
"There is a possibility that concerns over global growth, stemming from Europe, are causing businesses to hold back orders for new equipment," she added.
The data was included in the Commerce Department's report on durable goods orders in the month of April, which showed a modest increase in orders amid a rebound in orders for transportation equipment.
A separate report from the Labor Department showed a modest decrease in initial jobless claims in the week ended May 19th. The report said jobless claims edged down to 370,000 from the previous week's revised figure of 372,000.
Among individual stocks, Hewlett-Packard (HPQ) rose by 3.3 percent after reporting better than expected second quarter results and raising its full year adjusted earnings guidance. The PC giant also announced a multi-year restructuring plan that includes the elimination of about 27,000 jobs.
Shares of Pandora Media (P) also showed a strong upward move after the online radio service reported a narrower than expected first quarter loss and provided upbeat guidance Pandora ended the day up by 12.3 percent.
Meanwhile, shares of Tiffany (TIF) came under pressure after the luxury goods retailer reported weaker than expected first quarter earnings and slashed its full year guidance.
Despite the lack of direction shown by the broader markets, substantial strength was visible among airline stocks. The NYSE Arca Airline Index surged up by 3.3 percent, with the strength in the sector partly due to some positive analyst comments from JP Morgan.
US Airways (LCC) helped to lead the airline sector higher, jumping 10.6 percent to its best closing level in over four years.
Tobacco stocks also turned in a strong performance on the day, resulting in a 2.2 percent gain by the NYSE Arca Tobacco Index. Universal (UVV) and Lorillard (LO) posted strong gains.
While health insurance, chemical, and housing stocks also saw notable strength, networking stocks came under considerable selling pressure. The NYSE Arca Networking Index fell by 1.7 percent amid steep losses by Acme Packet (APKT) and Polycom (PLCM).
Significant weakness was also visible among electronic storage, semiconductor, and software stocks, contributing to the loss posted by the tech heavy Nasdaq.
NetApp (NTAP) helped to lead the storage sector lower after reporting better than expected fourth quarter earnings but providing disappointing guidance.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index edged up by 0.1 percent, while Hong Kong's Hang Seng Index ended the day down by 0.6 percent.
Meanwhile, the major European markets all moved to the upside over the course of the trading day. While the German DAX Index rose by 0.5 percent, the French CAC 40 Index advanced by 1.2 percent, and the U.K.'s FTSE 100 Index jumped 1.6 percent.
In the bond market, treasuries saw notable weakness after ending the previous session firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.8 basis points to 1.759 percent.
Trading on Friday could be impacted by the release of Reuters and the University of Michigan's revised report on consumer sentiment in May, although any developments overseas are likely to take center stage.
Nonetheless, some traders may look to get a head start on the Memorial Day weekend, potentially leading to below average trading activity.
by RTT Staff Writer
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