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


After initially moving to the downside, stocks have shown a lack of direction over the course of morning trading on Thursday. The major averages climbed off their lows of the session but have recently been bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 6.27 points or 0.1 percent at 7,040.96, the Dow is down 38.98 points or 0.2 percent at 24,168.18 and the S&P 500 is down 0.68 points or less than a tenth of a percent at 2,615.42.

A negative reaction to quarterly results from Morgan Stanley (MS) contributed to the initial weakness on Wall Street, with the financial giant slumping by 6.3 percent.

The steep drop by Morgan Stanley comes after the company reported fourth quarter earnings and revenues that came in below analyst estimates.

Renewed trade concerns may also weighed on the markets after a report from the Wall Street Journal said federal prosecutors are pursuing a criminal investigation of China's Huawei Technologies for allegedly stealing trade secrets from U.S. partners.

However, the negative sentiment was partly offset by a report from the Philadelphia Federal Reserve showing a significant acceleration in the pace of growth in regional manufacturing activity in the month of January.

The Philly Fed said its index for current manufacturing activity in the region jumped to 17.0 in January from 9.1 in December, with a positive reading indicating growth. Economists had expected the index to tick up to 10.0.

A separate report from the Labor Department unexpectedly showed a modest decrease in first-time claims for unemployment benefits in the week ended January 12th.

The report said initial jobless claims edged down to 213,000, a decrease of 3,000 from the previous week's unrevised level of 216,000. Economists had expected jobless claims to inch up to 220,000.

Uncertainty about the impact of the ongoing government shutdown and the outlook for Brexit are also contributing to the choppy trading.

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

Oil service stocks are seeing notable weakness, however, with a steep drop by the price of crude oil weighing on the sector. Crude for February delivery is slumping $1.01 to $51.30 a barrel.

Computer hardware and financial stocks have also moved to the downside, while some strength is visible among chemical stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Thursday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Australia's S&P/ASX 200 Index rose by 0.3 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index has fallen by 0.3 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both down by 0.5 percent.

In the bond market, treasuries have pulled back near the unchanged line after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.738 percent.

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