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


Stocks have shown a lack of direction over the course of morning trading on Thursday following the sell-off seen in the previous session. The major averages have spent the morning bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 22.22 points or 0.3 percent at 7,444.27, the Dow is down 14.58 points or 0.1 percent at 25,584.16 and the S&P 500 is down 6.46 points or 0.2 percent at 2,779.22.

The choppy trading comes as traders are keeping a close eye on treasury yields, which have regained some ground after coming under pressure following the release of a Labor Department report showing a slight uptick in consumer prices in September.

The Labor Department said its consumer price index inched up by 0.1 percent in September after rising by 0.2 percent in August. Economists had expected prices to increase by another 0.2 percent.

Excluding food and energy prices, core consumer prices also crept up by 0.1 percent in September, matching the uptick seen in the previous month. Core prices had been expected to rise by 0.2 percent.

The report also said the annual rate of consumer price growth slowed to 2.3 percent in September from 2.7 percent in August, while the annual rate of core consumer price growth was unchanged at 2.2 percent.

"Overall, the September figures confirm that core inflation has lost a little momentum in recent months, and the stronger dollar will put downward pressure on goods prices over the coming year or so," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "But with activity growth still strong and underlying inflation in the services sector still trending higher, we suspect the Fed will continue to raise interest rates over the coming quarters."

A separate report released by the Labor Department unexpectedly showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended October 6th.

The report said initial jobless claims rose to 214,000, an increase of 7,000 from the previous week's unrevised level of 207,000. Economists had expected jobless claims to edge down to 206,000.

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Energy stocks are seeing considerable weakness, however, with the sector extending the sell-off seen in the previous session.

The continued weakness in the energy sector comes as the price of crude oil for November delivery is tumbled $1.13 to $72.04 a barrel after plunging $1.79 to $73.17 a barrel on Wednesday.

On the other hand, gold stocks have shown a strong move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 2.6 percent.

The rally by gold stocks comes amid a sharp increase by the price of the precious metal, as gold for December delivery is jumping $19.20 to $1,212.60 an ounce.

In overseas trading, stock markets across the Asia-Pacific moved sharply lower on Thursday following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index dove by 3.9 percent, while Hong Kong's Hang Seng Index slumped by 3.5 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has slumped by 1.4 percent, the French CAC 40 Index is down by 1 percent and the German DAX Index is down by 0.8 percent.

In the bond market, treasuries have pulled back off their highs of the session but remain in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.5 basis points at 3.180 percent.

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