After moving sharply higher over the course of the previous session, stocks are turning in a lackluster performance during trading on Friday. A mixed reaction to the monthly jobs report is contributing to the choppy trading on Wall Street.
The major averages are currently turning in a mixed performance, with the S&P 500 up 3.62 points or 0.3 percent at 1,435.74, while the Dow is down 6.12 points or 0.1 percent at 13,285.88 and the Nasdaq is down 1.57 points or 0.1 percent at 3,134.24.
Before the start of trading, the Labor Department released its closely watched monthly employment report, showing that employment increased by less than expected in the month of August.
While the data points to continued sluggishness in the labor market, the report has also increased optimism about further monetary stimulus from the Federal Reserve.
The report showed that employment increased by 96,000 jobs in August following a downwardly revised increase of 141,000 jobs in July. Economists had expected an increase of about 125,000 jobs compared to the addition of 163,000 jobs originally reported for the previous month.
Despite the weaker than expected job growth, the unemployment rate dropped to 8.1 percent in August from 8.3 in July amid a notable decrease in the size of the workforce. The unemployment rate had been expected to come in unchanged.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, lame job growth continues, averaging just 139,000 per month year to date, but all the markets are focused on is how central bankers will deal with the slowdown with more policy action. Ben's B52 will drop more money next week."
The Federal Reserve is scheduled to hold a monetary policy meeting next week, with the disappointing jobs data boosting optimism about another round of quantitative easing.
Meanwhile, shares of Intel (INTC) have come under pressure after the semiconductor giant cut its third quarter revenue guidance as a result of weaker than expected demand.
Intel said it now expects third quarter revenues of $13.2 billion, plus or minus $300 million, compared to its previous forecast for revenues of $13.8 billion to $14.8 billion. The company also said full-year capital spending is expected to be below the low-end of its previous outlook.
Sector News
Despite the lackluster performance by the broader markets, steel stocks are posting substantial gains on the day. The NYSE Arca Steel Index has surged up by 5.6 percent, adding to the 3.8 percent gain it posted in the previous session.
The strength among steel stocks may be partly due to news that China's National Development and Reform Commission approved more than $150 billion in infrastructure projects to help stimulate the economy.
Gold stocks have also moved sharply higher, benefiting from a notable increase by the price of the precious metal. With gold for December delivery jumping $31.80 to $1,737.40 an ounce, the NYSE Arca Gold Bugs Index is up by 3.1 percent.
Oil service, airline, and financial stocks are also seeing some strength on the day, while semiconductor stocks have moved to the downside after Intel cut its guidance.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved sharply higher on Friday on the heels of the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 2.2 percent, while Hong Kong's Hang Seng Index soared 3.1 percent.
The major European markets also moved to the upside, adding to yesterday's gains. While the German DAX Index advanced by 0.7 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both ended the day up by 0.3 percent.
In the bond market, treasuries continue to see considerable strength but have pulled back off their best levels. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.1 basis points at 1.622 percent after hitting a low of 1.589 percent.
by RTT Staff Writer
For comments and feedback: editorial@rttnews.com
Market Analysis