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U.S. Stocks Turning In Lackluster Performance Following Mixed Data

wallstreet nov02 18aug22 lt

Stocks are turning in a lackluster performance in morning trading on Thursday, with the major averages bouncing back and forth across the unchanged line following the pullback seen in the previous session.

Currently, the major averages are narrowly mixed. While the Dow is down 58.43 points or 0.2 percent at 33,921.89, the Nasdaq is up 14.69 points or 0.1 percent at 12,952.81 and the S&P 500 is up 2.49 points or 0.1 percent at 4,276.53.

The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets following recent strength.

The major averages have shown a substantial recovery from their June lows, reaching their highest levels in almost four months.

Lingering concerns about the outlook for the economy, interest rates and inflation have raised questions about whether the markets can sustain the upward move.

The lackluster performance by stocks also comes following the release of a mixed batch of U.S. economic data.

Before the start of trading, the Labor Department released a report unexpectedly showing a modest pullback in first-time claims for U.S. unemployment benefits in the week ended August 13th.

The Labor Department said initial jobless claims edged down to 250,000, a decrease of 2,000 from the previous week's revised level of 252,000.

Economists had expected jobless claims to inch up to 265,000 from the 262,000 originally reported for the previous week.

The Federal Reserve Bank of Philadelphia also released a report showing regional manufacturing activity unexpectedly returned to growth in the month of August.

The Philly Fed said its diffusion index for current activity jumped to a positive 6.2 in August from a negative 12.3 in July, with a positive reading indicating growth. Economists had expected the index to rebound to a negative 5.0.

Meanwhile, the National Association of Realtors released a report showing another significant decrease in existing home sales in the month of July.

NAR said existing home sales plunged by 5.9 percent to an annual rate of 4.81 million in July after tumbling by 5.5 percent to a revised rate of 5.11 million in June.

Economists had expected existing home sales to slump by 4.5 percent to a rate of 4.89 million from the 5.12 million originally reported for the previous month.

Existing home sales declined for the sixth consecutive month, falling to their lowest annual rate since May 2020.

A separate report released by the Conference Board showed a continued decrease by its reading on leading U.S. economic indicators in the month of July.

The Conference Board said its leading economic index fell by 0.4 percent in July following a revised 0.7 percent decrease in June.

Economists had expected the index to decline by 0.5 percent compared to the 0.8 percent drop originally reported for the previous month.

"The US LEI declined for a fifth consecutive month in July, suggesting recession risks are rising in the near term," said Ataman Ozyildirim, Senior Director, Economics, The Conference Board.

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

Energy stocks have moved sharply higher, however, benefiting from a sharp increase by the price of crude oil. Crude for September delivery is currently surging $2.27 to $90.38 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 3.2 percent, the NYSE Arca Natural Gas Index is up by 2.2 percent and the NYSE Arca Oil Index is up by 2 percent.

Significant strength has also emerged among networking stocks, as reflected by the 2.4 percent jump by the NYSE Arca Networking Index.

Cisco Systems (CSCO) is leading the networking sector higher, spiking by 6.9 percent after reporting better than expected fiscal fourth quarter results and providing upbeat guidance for the current quarter.

Semiconductor and computer hardware stocks are also seeing notable strength on the day, while biotechnology stocks have moved to the downside.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index slumped by 1 percent, while China's Shanghai Composite Index fell by 0.5 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the U.K.'s FTSE 100 Index is up by 0.2 percent, the German DAX Index and the French CAC 40 Index are both up by 0.3 percent.

In the bond market, treasuries are regaining ground after moving notably lower over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.8 basis points at 2.855 percent.

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