U.S. Stocks Showing A Lack Of Direction After Yesterday's Sell-Off

wallstreet aug27 06jan22 lt

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

Currently, the major averages are turning in a mixed performance. While the Dow is down 94.49 points or 0.3 percent at 36,312.62, the Nasdaq is up 12.68 points or 0.1 percent at 15,112.86 and the S&P 500 is up 4.83 points or 0.1 percent at 4,705.41.

The choppy trading on Wall Street may partly reflect uncertainty about the near-term outlook for the markets following the steep drop seen on Wednesday.

Stocks came under pressure late in the previous session in reaction to the minutes of the latest Federal Reserve meeting.

The minutes of the Fed's December meeting had a hawkish tone, suggesting the central bank will more aggressive in tightening monetary policy.

In addition to raising rates more quickly than previously anticipated, the minutes also indicated the Fed plans to begin reducing its balance sheet shortly after the first rate hike.

Traders may also be reluctant to continue making significant moves ahead of Friday's closely watched monthly jobs report.

Economists currently expect employment to jump by 400,000 jobs in December after rising by 210,000 jobs in November. The unemployment rate is expected to edge down to 4.1 percent from 4.2 percent.

With the monthly jobs report looming, the Labor Department released a report this morning unexpectedly showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended January 1st.

The report showed initial jobless claims crept up to 207,000, an increase of 7,000 from the previous week's revised level of 200,000.

The uptick came as a surprise to economists, who had expected jobless claims to edge down to 197,000 from the 198,000 originally reported for the previous week.

A separate report from the Institute for Supply Management showed U.S. service sector growth slowed from a record high in the month of December.

The ISM said its services PMI slid to 62.0 in December from 69.1 in November, although a reading above 50 still indicates growth. Economists had expected the index to drop to 66.9.

Reflecting the lack of direction being shown by the broader markets, most of the major sectors are showing only modest moves on the day.

Energy stocks have moved sharply higher, however, with a substantial increase by the price of crude oil contributing to the strength in the sector. Crude for February delivery is currently jumping $1.91 to $79.76 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index and the NYSE Arca Oil Index are both up by 2.3 percent.

A continued increase by Treasury yields has also contributed to notable strength among banking stocks, with the KBW Bank Index climbing by 1.3 percent.

On the other hand, gold stocks are turning in some of the market's worst performances on the day, dragging the NYSE Arca Gold Bugs Index down by 2.6 percent.

The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, as gold for February delivery is plunging $36 to $1,789.10 an ounce.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index plummeted by 2.9 percent, while China's Shanghai Composite Index fell by 0.3 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 percent, the German DAX Index and the French CAC 40 Index are down by 1.4 percent and 1.6 percent, respectively.

In the bond market, treasuries are extending the notable downward move seen over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.5 basis points at 1.730 percent.

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