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Stocks Close Roughly Flat After Seeing Early Volatility - U.S. Commentary

Stocks Close Roughly Flat After Seeing Early Volatility - U.S. Commentary

After seeing considerable volatility early in the session, stocks ended Friday's trading roughly flat as traders digested the Labor Department's closely watched monthly employment report as well as the latest developments regarding the situation in Syria.

The major averages ended the day near the unchanged line, turning in a mixed performance. While the Dow edged down 14.98 points or 0.1 percent to 3,660.01, the Nasdaq crept up 1.23 points or less than 0.1 percent to 3,660.01 and the S&P 500 inched up 0.09 points or less than 0.1 percent to 1,655.17.

For the holiday-shortened week, the Dow advanced by 0.8 percent, while the Nasdaq and the S&P 500 surged up by 2 percent and 1.4 percent, respectively.

The roughly flat close on Wall Street came on the heels of the release of a report from the Labor Department showing weaker than expected job growth in the month of August.

The Labor Department said non-farm payroll employment increased by 169,000 jobs in August compared to economist estimates for an increase of about 175,000 jobs.

The report also showed a notable downward revision to the pace of job growth in July, with the revised data showing an addition of 104,000 jobs compared to the previously reported increase of 162,000 jobs.

Despite the weaker than expected job growth, the unemployment rate dipped to 7.3 percent in August from 7.4 percent in July. The unemployment rate had been expected to come in unchanged.

The mixed report led to some uncertainty about the outlook for the Federal Reserve's stimulus program, with some analysts suggesting that the weaker than expected job growth could lead the central bank to delay plans to taper its asset purchases.

The choppy trading also came as comments at the conclusion of the G20 Summit in St. Petersburg raised concerns about potential military action in Syria.

U.S. President Barack Obama and Russian President Vladimir Putin met on the sidelines of the summit, but the two leaders remain far apart on the issue of military action.

Following the meeting Putin reportedly told a press conference that Russia would "assist" Syria in the event of a U.S. attack, although the type of assistance that would be provided was not immediately clear. Russia already provides Syria with military equipment.

However, Obama claimed that there is an increasing global consensus that Syria must be held accountable for its alleged use of chemical weapons.

Sector News

Despite the roughly flat close by the broader markets, gold stocks ended the day posting substantial gains. Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index surged up by 1.9 percent.

The strength among gold stocks came amid an increase by the price of the precious metal, with gold for December delivery climbing $13.50 to $1,386.50 an ounce.

Commercial real estate stocks also showed a strong move to the upside on the day, driving the Morgan Stanley REIT Index up by 1.6 percent. FelCor Lodging Trust (FCH) and HCP, Inc. (HCP) turned in two of the sector's best performances.

Significant strength was also visible among housing stocks, as reflected by the 1.5 percent gain posted by the Philadelphia Housing Sector Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday. Hong Kong's Hang Seng Index inched up by 0.1 percent, while China's Shanghai Composite Index advanced by 0.8 percent. However, Japan's Nikkei 225 Index bucked the uptrend and dropped by 1.5 percent.

The major European markets also ended the day on the upside. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the German DAX Index rose by 0.5 percent and the French CAC 40 Index surged up by 1.1 percent.

In the bond market, treasuries gave back ground after rising sharply in early trading but still managed to end the day higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.1 basis points to 2.938 percent after hitting a low of 2.864 percent.

Looking Ahead

Developments regarding potential U.S. military action in Syria are likely to be in focus early next week, particularly in light of a lack of major U.S. economic data.

Later in the week, trading could be impacted by the release of reports on weekly jobless claims, retail sales, and producer price inflation.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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