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Major Averages Lingering Near The Unchanged Line - U.S. Commentary


Stocks recovered from an initial move to the downside on Thursday but have shown a lack of direction throughout the session since then. The major averages have been bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Dow is down 9.33 points or less than a tenth of a percent at 24,197.83, the Nasdaq is up 12.20 points or 0.2 percent at 7,046.89 and the S&P 500 is up 4.88 points or 0.2 percent at 2,620.98.

A negative reaction to quarterly results from Morgan Stanley (MS) contributed to the initial weakness on Wall Street, with the financial giant slumping by 4.5 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 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.

Sector News

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

Steel stocks have shown a strong move to the upside, however, with the NYSE Arca Steel Index climbing by 1.2 percent.

Chemical, biotechnology, and tobacco stocks are also seeing some strength in mid-day trading, while weakness is visible among computer hardware stocks.

Other Markets

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 all moved to the downside on the day. While the German DAX Index edged down by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index fell by 0.3 percent and 0.4 percent, respectively.

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 2.734 percent.

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