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Late Volatility Leads To Another Mixed Close On Wall Street - U.S. Commentary


Stocks saw some volatility in the latter part of the trading day on Friday before ending the session showing another lackluster performance. The major averages closed on opposite sides of the unchanged line for the fourth consecutive day.

After pulling back sharply in the mid-afternoon, the Dow rebounded going into the close and ended the day up by 8.37 points or 0.1 percent at 13,981.76. Meanwhile, the Nasdaq slipped 6.63 points or 0.2 percent to 3,192.03 and the S&P 500 edged down 1.59 points or 0.1 percent to 1,519.79.

The major averages also turned in a mixed performance for the week, as the S&P 500 inched up by 0.1 percent, while the Dow and the Nasdaq both dipped by 0.1 percent.

The choppy trading seen for much of the session came as traders continued to express uncertainty about the near-term outlook for the markets after recent gains lifted the major averages to multi-year highs.

While the major averages have largely held on to their recent gains, a lack of meaningful catalysts has prevented the markets from seeing much further upside.

A mixed back of economic data also contributed to the lackluster performance, with traders weighing upbeat reports on New York manufacturing activity and consumer sentiment against a disappointing report on industrial production.

The New York Federal Reserve said its general business conditions index jumped to a positive 10.0 in February from a negative 7.8 in January, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to climb to a negative 1.8.

With the much bigger than expected increase, the general business conditions index turned positive for the first time since July of 2012.

Reuters and the University of Michigan also released their preliminary report on consumer sentiment in the month of February, showing that the consumer sentiment index climbed to 76.3 from January's final reading of 73.8. The index had been expected to edge up to 75.0.

Meanwhile, the Federal Reserve said industrial production edged down by 0.1 percent in January following a revised 0.4 percent increase in December.

Economists had expected production to increase by 0.3 percent, matching the growth originally reported for the previous month.

However, troubling news regarding Wal-Mart (WMT) generated considerable selling pressure in mid-afternoon trading, with the retail giant ending the day down by 2.2 percent.

The loss by Wal-Mart came after a report from Bloomberg based on internal emails suggested that the payroll tax increase is having a significantly negative impact on the company's February sales.

Bloomberg cited an email from Jerry Murray, Wal-Mart's vice president of finance and logistics, as saying February's month-to-date sales are a "total disaster" and the worst start to a month in his seven years at the company.

Sector News

While many of the major sectors once again ended the day showing only modest moves, substantial weakness was visible among gold stocks. The NYSE Arca Gold Bugs Index tumbled by 3.6 percent to a nine-month closing low.

The weakness among gold stocks came amid a sharp drop by the price of the precious metal, with gold for April delivery falling by $26 to $1,609.50 an ounce.

Energy stocks also came under considerable selling pressure, moving lower along with the price of crude oil. Crude for March delivery dropped $1.45 to $95.86 a barrel.

Steel, trucking, and banking stocks also saw moderate weakness on the day, although selling pressure was relatively subdued.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. While Japan's Nikkei 225 Index tumbled by 1.2 percent, Hong Kong's Hang Seng Index edged up by 0.1 percent.

The major European markets also ended the day mixed. The U.K.'s FTSE 100 Index closed just above the unchanged line, while the French CAC 40 Index dipped by 0.3 percent and the German DAX Index fell by 0.5 percent.

In the bond market, treasuries climbed well off their early lows in late-day trading, ending the session nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by less than a basis point to 2.007 percent.

Looking Ahead

Following the President's Day holiday on Monday, a slew of economic data is scheduled to be released in the middle of next week, including reports on housing starts, existing home sales, and consumer and producer price inflation.

On the earnings front, Dell (DELL), Hewlett-Packard (HPQ), and Wal-Mart are among the companies scheduled to release their quarterly results next week.

by RTTNews Staff Writer

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