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Stocks Showing A Lack Of Direction In Early Trading - U.S. Commentary


Stocks are turning in a lackluster performance in early trading on Friday amid continued uncertainty about the looming fiscal cliff. The major averages are showing only modest moves after ending the previous session firmly in negative territory.

The major averages are currently turning in a mixed performance, with the Dow posting a modest gain. While the Dow is up 13.17 points or 0.1 percent at 13,183.89, the Nasdaq is down 8.66 points or 0.3 percent at 2,983.50 and the S&P 500 is down 1.31 points or 0.1 percent at 1,418.14.

The choppy trading on Wall Street comes as traders continue to keep a close eye on developments in Washington, as lawmakers continue to struggle to reach a budget agreement.

While President Barack Obama and House Speaker John Boehner met at the White House yesterday evening, it is unclear if the two men were able to make any progress on narrowing the gap between their opposing budget proposals.

As a result of the focus on Washington, traders have shrugged off the latest batch of economic data, including a report from the Federal Reserve showing a notable rebound in U.S. industrial production.

The report said industrial production surged up by 1.1 percent in November after falling by a downwardly revised 0.7 percent in October. Economists had expected production to increase by 0.3 percent compared to the 0.4 percent drop originally reported for the previous month.

The Federal Reserve said the rebound in production reflected a recovery in production for industries that were negatively affected by Hurricane Sandy.

Meanwhile, the Labor Department released a separate report showing a bigger than expected drop in U.S. consumer prices in the month of November.

The Labor Department said its consumer price index fell by 0.3 percent in November following a 0.1 percent increase in October. Economists had been expecting prices to edge down by 0.2 percent.

Excluding a steep drop in energy prices as well as a modest increase in food prices, the core consumer price index inched up 0.1 percent in November after rising by 0.2 percent in October. Core prices had been expected to increase by 0.2 percent.

Most of the major sectors are showing only modest moves, contributing to the lack of direction being shown by the broader markets.

Nonetheless, considerable weakness has emerged among health insurance stocks, as reflected by the 2.3 percent loss being posted by the Morgan Stanley Healthcare Payor Index. Centene (CNC) is leading the sector lower after slashing its full-year guidance.

On the other hand, steel stocks are seeing early strength on the heels of upbeat Chinese manufacturing data. Networking and chemical stocks have also shown notable moves to the upside.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. While Japan's Nikkei 225 Index edged down by 0.1 percent, Hong Kong's Hang Seng Index advanced by 0.7 percent.

The major European markets have also turned mixed on the day. The German DAX Index has edged up by 0.1 percent, while the U.K.'s FTSE 100 Index is down by 0.1 percent and the French CAC 40 Index is down by 0.2 percent.

In the bond market, treasuries are regaining some ground following recent weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.5 basis points at 1.713 percent after ending the previous session at a one-month closing high.

by RTTNews Staff Writer

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