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Major Averages Close Mixed Following Lackluster Session - U.S. Commentary


Extending the volatile performance seen in the previous session, stocks showed a lack of direction over the course of the trading day on Thursday. The Dow and the S&P 500 spent the day bouncing back and forth across the unchanged line, although the tech-heavy Nasdaq managed to remain positive.

The major averages eventually ended the session mixed. While the Dow edged down 22.38 points or 0.1 percent to 24,553.24, the Nasdaq advanced 47.69 points or 0.7 percent to 7,073.46 and the S&P 500 inched up 3.63 points or 0.1 percent to 2,642.33.

The choppy trading on Wall Street came 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 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

Despite the lackluster performance by the broader markets, semiconductor stocks showed a substantial move to the upside on the day. The Philadelphia Semiconductor Index spiked by 5.7 percent to its best closing level in well over a month.

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

Significant strength was also visible among oil service stocks, as reflected by the 2.2 percent jump by the Philadelphia Oil Service Index. The rally by oil service stocks came as the price of crude oil for March delivery climbed $0.51 to $53.13 a barrel.

Computer hardware, housing, and natural gas stocks also saw considerable strength on the day, while tobacco and pharmaceutical stocks showed significant moves to the downside.

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 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, slid by 4.3 basis points to 2.712 percent.

Looking Ahead

Earnings news is likely to be in the spotlight on Friday, with Intel (INTC), E*Trade (ETFC), Norfolk Southern (NSC), Starbucks (SBUX) and Western Digital (WDC) among the companies releasing their quarterly results after the close of today's trading.

Colgate-Palmolive (CL), D.R. Horton (DHI), and Ericsson (ERIC) are also among the companies due to report their results before the start of trading on Friday.

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