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U.S. Stocks Showing A Lack Of Direction As Traders Take A Breather

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Stocks have shown a lack of direction over the course of morning trading on Friday, with the major averages bouncing back and forth across the unchanged line. The choppy trading comes on the heels of the pullback seen over the two previous sessions.

Currently, the major averages are turning in a mixed performance. While the Dow is up 15.56 points or 0.1 percent at 27,917.54, the Nasdaq is down 20.35 points or 0.2 percent at 10,889.93 and the S&P 500 is down 8.43 points or 0.3 percent at 3,348.58.

The lackluster performance on Wall Street comes as traders seem reluctant to make significant moves following the substantial volatility seen over the past several sessions.

Stocks started the week on an upbeat note, regaining ground after falling sharply last week, but selling pressure re-emerged following the Federal Reserve's monetary policy announcement on Wednesday.

While the Fed indicated it plans to leave interest rates at near-zero levels for years to come, traders seem skeptical that will be enough to support the economy.

With the elections less than two months away, lawmakers currently seem unlikely to pass another stimulus bill to help the economy recover from the coronavirus pandemic.

Recent economic data suggests the rebound from the lockdown-induced economic collapse may be plateauing, raising concerns about the possibility of a double-dip.

A report released by the Conference Board showed a continued increase by its reading on leading U.S. economic indicators in the month of August, although the pace of growth slowed compared to recent months.

The Conference Board said its leading economic index jumped by 1.2 percent in August after surging up by 2.0 percent in July and spiking by 3.1 percent in June. Economists had expected the index to increase by 1.3 percent.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the slowdown in the pace of improvement "suggests that this summer's economic rebound may be losing steam heading into the final stretch of 2020."

Meanwhile, a separate report from the University of Michigan showed a much bigger than expected improvement in consumer sentiment in the month of September.

The preliminary report said the consumer sentiment index climbed to 78.9 in September from 74.1 in August. Economists had expected the index to show a much more modest uptick to 75.0.

The index reached its highest level since March but is still well below the pre-pandemic reading of 101.0 seen in February.

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

Airline stocks have shown a significant move to the downside, however, with the NYSE Arca Airline Index falling by 1.4 percent. The index continues to give back ground after reaching a three-month closing high on Wednesday.

Notable weakness is also visible among commercial real estate stocks, as reflected by the 1.1 percent drop by the Dow Jones U.S. Real Estate Index.

On the other hand, steel stocks are extending the strong upward move seen on Thursday, driving the NYSE Arca Steel Index up by 1.6 percent to its best intraday level in nearly seven months.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index edged up by 0.2 percent, while China's Shanghai Composite Index spiked by 2.1 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the French CAC 40 Index has slumped by 1 percent, the U.K.'s FTSE 100 Index and the German DAX Index are down by 0.4 percent and 0.3 percent, respectively.

In the bond market, treasuries continue to show a lack of direction after closing nearly flat for four straight sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 0.689 percent.

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