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Major Averages Just Below Unchanged Line In Mid-Day Trading - U.S. Commentary


Stocks have fluctuated over the course of the trading session on Thursday but have largely maintained a slightly negative bias. The choppy trading on the day extends the lackluster performance seen over the two previous sessions.

Currently, the major averages are just below the unchanged line. The Dow is 16.22 points or 0.1 percent at 25,968.94, the Nasdaq is down 1.60 points or less than a tenth of a percent at 7,552.91 and the S&P 500 is down 1.75 points or 0.1 percent at 2,790.63.

The modest weakness on Wall Street comes after the summit between President Donald Trump and North Korean leader Kim Jong Un ended abruptly without an agreement on the denuclearization of the Korean peninsula.

Trump told reporters the North Korean dictator wanted the U.S. to lift all sanctions without having to give up all of his weapons of mass destruction.

"Basically, they wanted the sanctions lifted in their entirety and we couldn't do that," Trump said. "They were willing to de-nuke a large portion of the areas that we wanted, but we couldn't give up all of the sanctions for that."

"So we continue to work and we'll see, but we had to walk away from that particular suggestion," he added. "We had to walk away from that."

The president noted that the two sides will continue to work toward an agreement, although the lack of a deal at the summit has added to recent uncertainty on Wall Street.

However, the negative sentiment was partly offset by a report from the Commerce Department showing U.S. economic growth slowed by less than expected in the fourth quarter of 2018.

The report said real gross domestic product climbed by 2.6 percent in the fourth quarter compared to the 3.4 percent jump in the third quarter. Economists had expected GDP to increase by 2.3 percent.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said the details of the report show "better-than-forecast contributions from domestic consumption and business investment."

"Nevertheless, as a result of the already-reported weakness in retail sales and exports in the final month of last year, we expect first-quarter GDP growth to be a more disappointing 1.5% annualized," he added.

Sector News

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

Oil service stocks continue to see substantial weakness, however, with the Philadelphia Oil Service Index tumbling by 2.3 percent.

The sell-off by oil service stocks comes despite a modest increase by the price of crude oil, as crude for April delivery is rising $0.16 to $57.10 a barrel.

Significant weakness also remains visible among computer hardware stocks, as reflected by the 1.9 percent slump by the NYSE Arca Computer Hardware Index.

HP Inc. (HPQ) is leading the sector lower after the personal computer and printer maker reported fiscal first quarter revenues that came in below analyst estimates.

Chemical, housing, and steel stocks are also seeing notable weakness on the day, while considerable strength has emerged among commercial real estate stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index slid by 0.8 percent, while Hong Kong's Hang Seng Index fell 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 edged down by 0.2 percent, the German DAX Index and the French CAC 40 Index both rose by 0.3 percent.

In the bond market, treasuries have turned lower over the course of the session after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.6 basis points at 2.719 percent.

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