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U.S. Stocks Turning In Another Lackluster Performance In Morning Trading

wallstreet sept18 14aug20 lt

Following the lackluster performance seen in the previous session, stocks continue to show a lack of direction in morning trading on Friday. While the Nasdaq has slid firmly into negative territory, the Dow and the S&P 500 are showing more modest moves.

Currently, the major averages are all in the red. The Dow is down 25.44 points or 0.1 percent at 27,871.28, the Nasdaq is down 47.45 points or 0.4 percent at 10,995.05 and the S&P 500 is down 3.01 points or 0.1 percent at 3,370.42.

Traders seem reluctant to make more significant moves amid uncertainty about the near-term outlook for the markets.

The S&P 500 once again failed to reach a new record high during trading on Thursday, raising concerns recent upward momentum on Wall Street may have reached its limit.

With earnings season largely in the rear-view mirror and talks about a new coronavirus relief bill at a stalemate, traders may be unsure about the next catalyst to drive the markets.

Traders are also digesting a slew of U.S. economic data, including a report from the Commerce Department showing retail sales jumped by less than expected in July amid a pullback in auto sales.

The Commerce Department said retail sales advanced by 1.2 percent in July after soaring by an upwardly revised 8.4 percent in June.

Economists had expected retail sales to jump by 1.9 percent compared to the 7.5 percent spike originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales surged up by 1.9 percent in July after skyrocketing by 8.3 percent in June. Ex-auto sales were expected to increase by 1.3 percent.

Meanwhile, the Federal Reserve released a report showing a jump in U.S. industrial production in the month of July that matched economist estimates.

The Fed said industrial production surged up by 3.0 percent in July after soaring by an upwardly revised 5.7 percent in June.

Economists had expected production to jump by 3.0 percent compared to the 5.4 percent spike originally reported for the previous month.

Despite the substantial increases seen over the past two months, the Fed noted production is still 8.4 percent below its pre-pandemic February level.

A preliminary reading released by the University of Michigan unexpectedly showed a slight improvement in U.S. consumer sentiment in the month of August.

The report said the consumer sentiment index inched up to 72.8 in August from 72.5 in July. The uptick surprised economists, who had expected the index to edge down to 72.0.

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

Gold stocks have shown a notable move to the downside, however, with the NYSE Arca Gold Bugs Index falling by 1.2 percent.

The weakness among gold stocks comes amid a decrease by the price of the precious metal, as gold for December delivery is slumping $15.60 to $1,954.80 an ounce.

On the other hand, natural gas stocks have moved sharply higher in morning trading, driving the NYSE Arca Natural Gas Index up by 1.9 percent.

A sharp increase by the price of natural gas is contributing to the strength in the sector, with natural gas for September delivery spiking $0.132 or 6.1 percent to$2.314 per million BTUs.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index crept up by 0.2 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets have all shown notable moves to the downside on the day. While the German DAX Index has slumped by 0.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both down by 1.7 percent.

In the bond market, treasuries have moved modestly higher after trending lower over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.6 basis points at 0.700 percent.

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