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Stocks Close Roughly Flat Following Choppy Trading Day - U.S. Commentary


Following the volatility seen over the past several sessions, stocks turned in a lackluster performance during trading on Friday. The major averages spent much of the day bouncing back and forth across the unchanged line before closing roughly flat.

The major averages ended the day on opposite sides of the unchanged line. While the Dow edged down 11.76 points or 0.1 percent to 16,643.01, the Nasdaq rose 15.62 points or 0.3 percent to 4,828.32 and the S&P 500 inched up 1.21 points or 0.1 percent to 1,988.87.

For the week, the major averages all moved higher due to the recovery rally on Wednesday and Thursday. The Nasdaq surged up by 2.6 percent, while the Dow and the S&P 500 advanced by 1.1 percent and 0.9 percent, respectively.

The choppy trading on Wall Street on the day came as some traders took a breather following the big swings seen in recent sessions.

Stocks moved sharply higher over the two previous sessions, although the strong rebound came on the heels of a steep decline in the six preceding sessions.

Traders were also reacting to comments by Federal Reserve Vice Chairman Stanley Fischer about the outlook for interest rates.

In an interview with CNBC, Fischer said it was too early to tell if the Fed will raise rates in September but noted that the central bank is heading in the direction of raising rates.

"We've got a little over two weeks before we make the decision," Fischer said. "And we've got time to wait and see the incoming data, and see what is going on now in the economy."

Fischer's remarks may lead to continued volatility in the coming weeks as traders focus on the incoming economic data, particularly next Friday's monthly jobs report.

The Commerce Department released a report this morning showing that personal income increased in line with economist estimates in the month of July.

The report said personal income rose by 0.4 percent, matching the increases seen in the three previous months as well as the consensus estimate.

Personal spending increased by 0.3 percent for the second consecutive month, although economists had expected spending to climb by 0.4 percent.

A separate report from the University of Michigan showed an unexpected downward revision to its consumer sentiment index for August.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the roughly flat close by the broader markets.

Gold stocks showed a substantial move to the upside on the day, however, with the NYSE Arca Gold Bugs Index surging up by 4.3 percent. The strength in the sector came as gold for December delivery climbed $11.40 to $1,134 an ounce.

Significant strength was also visible among energy stocks, which moved higher as crude oil for October delivery jumped $2.66 to $45.22 a barrel after surging up $3.96 to $42.56 barrel on Thursday.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index soared by 3.4 percent, the NYSE Arca Natural Gas Index jumped by 2.9 percent and the NYSE Arca Oil & Gas Index climbed by 1.7 percent.

Meanwhile, electronic storage stocks moved sharply lower, dragging the NYSE Arca Disk Drive Index down by 2.5 percent.

The index pulled back after moving sharply higher in the two previous sessions but remained well off the two-year closing low set on Tuesday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday. Japan's Nikkei 225 Index surged up by 3 percent, while Australia's All Ordinaries Index rose by 0.6 percent. However, Hong Kong's Hang Seng Index bucked the uptrend and slid by 1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index edged down by 0.2 percent, the French CAC 40 Index rose by 0.4 percent and the U.K.'s FTSE 100 Index advanced by 0.9 percent.

In the bond market, treasuries turned lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.8 basis points to 2.186 percent.

Looking Ahead

Amid the uncertainty about the outlook for interest rates, the monthly jobs report is likely to be in focus next week allowing with a slew of other U.S. economic data.

Ahead of the jobs report on Friday, trading could be impacted by reports on manufacturing and service sector activity, construction spending, and international trade as well as the Fed's Beige Book.

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