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Stocks Extending Yesterday's Volatile Performance - U.S. Commentary


Stocks have shown a lack of direction over the course of the trading day on Thursday, extending the volatility seen in the previous session. The Dow and the S&P 500 have spent the day bouncing back and forth across the unchanged line, although the tech-heavy Nasdaq has managed to remain positive.

The major averages have moved to the upside in recent trading. While the Nasdaq is up 45.57 points or 0.7 percent at 7,071.34, the Dow is up 19.63 points or 0.1 percent at 24,595.25 and the S&P 500 is up 5.47 points or 0.2 percent at 2,644.17.

The choppy trading on Wall Street comes after Commerce Secretary Wilbur Ross told CNBC the U.S. is "miles and miles" from a trade deal with China.

"Frankly, that shouldn't be too surprising," Ross said in an interview on CNBC's "Squawk Box," noting the U.S. and China have "lots and lots of issues."

The comments from Ross come ahead of Chinese Vice Premier Liu He's trip to Washington next week for the next round of trade negotiations.

Concerns about a U.S.-China trade deal have partly offset positive sentiment generated by a report from the Labor Department showing initial jobless claims fell to their lowest level in almost fifty years in the week ended January 19th.

The report said initial jobless claims slid to 199,000, a decrease of 13,000 from the previous week's revised level of 212,000.

The drop surprised economists, who had expected jobless claims to rise to 220,000 from the 213,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 197,000 in November of 1969.

Meanwhile, a separate report from the Conference Board showed a modest decrease by its index of leading U.S. economic indicators in the month of December.

The Conference Board said its leading economic index edged down by 0.1 percent in December after rising by 0.2 percent in November. The slight drop by the index matched economist estimates.

"The US LEI declined slightly in December and the recent moderation in the LEI suggests that the US economic growth rate may slow down this year," said Ataman Ozyildirim, Director of Economic Research at the Conference Board.

He added, "While the effects of the government shutdown are not yet reflected here, the LEI suggests that the economy could decelerate towards 2 percent growth by the end of 2019."

Sector News

Semiconductor stocks continue to see substantial strength in mid-trading, resulting in a 6 percent spike by the Philadelphia Semiconductor Index. The index has jumped to its best intraday level in well over a month.

Shares of Xilinx (XLNX) are moving sharply higher after the chipmaker reported better than expected fiscal third quarter results and provided upbeat guidance for the current quarter.

Significant strength has also emerged among oil service stocks, as reflected by the 2.9 percent rally by the Philadelphia Oil Service Index. The strength in the sector comes as the price of crude oil for March delivery is climbing $0.50 to $53.12 a barrel.

Computer hardware, natural gas, and housing stocks are also seeing considerable strength on the day, while pharmaceutical and tobacco stocks have come under pressure.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, although Japan's Nikkei 225 Index edged down by 0.1 percent. Hong Kong's Hang Seng Index and Australia's S&P/ASX 200 Index both rose by 0.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the German DAX Index and the French CAC 40 Index climbed by 0.5 percent and 0.7 percent, respectively.

In the bond market, treasuries have moved back to the upside following the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.1 basis points at 2.714 percent.

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