Major Averages Finish Choppy Trading Day Modestly Lower - U.S. Commentary

(RTTNews) - After ending the previous session mostly higher, stocks showed a lack of direction over the course of the trading session on Thursday. The major averages spent the day bouncing back and forth across the unchanged line before closing modestly lower.

The major averages ended the day in negative territory but off their lows of the session. The Dow dipped 54.95 points or 0.2 percent to 24,713.98, the Nasdaq slipped 15.82 points or 0.2 percent to 7,382.47 and the S&P 500 edged down 2.33 points or 0.1 percent to 2,720.13.

The choppy trading on Wall Street came as traders expressed some uncertainty about the second round of trade talks between the U.S. and China.

Blaming the trade policies of previous administrations, President Donald Trump expressed some doubt about whether the high-level trade talks with China will be successful.

Trump told reporters he tends to doubt the talks will be successful in remarks during an Oval Office meeting with NATO Secretary General Jens Stoltenberg.

"The reason I doubt it is because China has become very spoiled," Trump said. "The European Union has become very spoiled. Other countries have become very spoiled, because they always got 100 percent of whatever they wanted from the United States."

However, Trump also claimed he would not allow the U.S. to be taken advantage of anymore and sounded more optimistic in later remarks.

"I can only tell you this; we're going to come out fine with China," Trump said. "Hopefully, China's going to be happy. I think we will be happy."

The comments from Trump come as Chinese officials have traveled to Washington for a second round of trade talks with Treasury Secretary Steven Mnuchin and others.

On the U.S. economic front, the Conference Board released a report showing a continued increase by its index of leading economic indicators.

The Conference Board said its leading economic index rose by 0.4 percent in April, matching the upwardly revised increase in March as well as economist estimates.

Ataman Ozyildirim, Director of Business Cycles and Growth Research at the Conference Board, said, "April's increase and continued uptrend in the U.S. LEI suggest solid growth should continue in the second half of 2018."

"However, the LEI's six-month growth rate has recently moderated somewhat, suggesting growth is unlikely to strongly accelerate," he added.

Before the start of trading, the Labor Department released a report showing a bigger than expected increase in initial jobless claims in the week ended May 12th.

The report said initial jobless claims rose to 222,000, an increase of 11,000 from the previous week's unrevised level of 211,000. Economists had expected jobless claims to inch up to 215,000.

Meanwhile, a separate report from the Philadelphia Federal Reserve unexpectedly showed a significant acceleration in the pace of growth in regional manufacturing activity in the month of May.

Among individual stocks, shares of J.C. Penney (JCP) moved sharply lower after the department store chain reported a narrower than expected first quarter adjusted loss but cut its full-year earnings guidance.

Retail giant Wal-Mart (WMT) also moved to the downside on the day despite reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Dillard's (DDS) jumped after the department store operator reported first quarter earnings that exceeded analyst estimates.

Sector News

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

Energy stocks saw considerable strength, however, with the sector continuing to perform well even as the price of crude oil pulled back off its early highs.

After reaching a three-and-a-half year high of $72.30 a barrel, crude for June delivery ended the day unchanged at $71.49 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Oil & Gas Index advanced by 1.8 percent, while the NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index climbed by 1.7 percent and 1.5 percent, respectively.

Brokerage and housing stocks also saw modest strength on the day, while utilities stocks extended the downward move seen over the past few sessions.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index climbed by 0.5 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index jumped by 1 percent, the German DAX Index and the U.K.'s FTSE 100 Index advanced by 0.9 percent and 0.7 percent, respectively.

In the bond markets, treasuries saw modest weakness, extending a recent downward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by 1.4 basis points to 3.109 percent.

Looking Ahead

Amid a quiet day on the U.S. economic front, trading on Friday may be impacted by reaction to the latest batch of earnings news.

Applied Materials (AMAT) and Nordstrom (JWN) are among the companies releasing their quarterly results after the close of today's trading.

Additionally, Campbell Soup (CPB) and Deere (DE) are among the companies due to report their results before the start of trading on Friday.