Stocks Climb Well Off Lows But Still Close In The Red - U.S. Commentary

(RTTNews) - After coming under pressure in morning trading on Friday, stocks regained some ground as the day progressed but still closed mostly lower. With the drop, the Dow closed in the red for the seventh straight session, falling to a new six-month low.

The major averages ended the session in negative territory but well off their worst levels of the day. The Dow fell 46.37 points or 0.3 percent to 17,373.38, the Nasdaq dipped 12.90 points or 0.3 percent to 5,043.54 and the S&P 500 slid 5.99 points or 0.3 percent to 2,077.57.

For the week, the S&P 500 tumbled by 1.2 percent, while the Dow and the Nasdaq plummeted by 1.8 percent and 1.7 percent, respectively.

The early weakness on Wall Street came following the release of the highly anticipated monthly jobs data, which was widely seen as strong enough to support an increase in interest rates in September.

The Labor Department said non-farm payroll employment rose by 215,000 jobs in July following an upwardly revised increase of 231,000 jobs in June.

Economists had expected employment to climb by about 223,000 jobs, which would have matched the increase originally reported for the previous month.

While the job growth came in below the consensus estimate, Paul Ashworth, Chief U.S. Economist at Capital Economics, said the increase is easily enough to keep the Federal Reserve on course for a September interest rate hike.

The report also said the unemployment rate held at 5.3 percent in July, unchanged from the seven-year low set in June. The unchanged reading matched economist estimates.

The annual rate of average hourly earnings growth ticked up to 2.1 percent in July from 2.0 percent in June, but Ashworth said "there is still absolutely no sign whatsoever of any meaningful acceleration in that growth rate."

"Nevertheless, Fed Chair Janet Yellen has stressed that an acceleration in wage growth is not a necessary pre-condition for raising interest rates, so it won't prevent a September rate hike," Ashworth said.

The recovery attempt seen in afternoon trading was partly attributed to a rally by shares of American Express (AXP), which surged up by 6.3 percent.

The jump by American Express came after Bloomberg News reported activist fund ValueAct took a $1 billion stake in the credit card giant.

Sector News

Despite the recovery attempt by the broader markets, oil service stocks still ended the session significantly lower. Reflecting the weakness in the sector, the Philadelphia Oil Service Index slumped by 2.3 percent.

The weakness among oil service stocks came amid a decrease by the price of crude oil, with crude for September delivery sliding $0.79 to $43.87 a barrel.

Considerable weakness also remained visible among tobacco stocks, as reflected by the 2.4 percent loss posted by the NYSE Arca Tobacco Index. Universal (UVV) led the sector lower after reporting a first quarter net loss.

Trucking stocks also came under pressure over the course of the session, dragging the Dow Jones Trucking Index down by 1.8 percent. With the drop, the index pulled back further off the three-month closing high set on Monday.

Steel, chemical, electronic storage and railroad stocks also saw notable weakness on the day, while utilities stocks showed a strong move to the upside as the trading session progressed.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.3 percent and Hong Kong's Hang Seng Index advanced by 0.7 percent, while Australia's All Ordinaries Index tumbled by 2.3 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the French CAC 40 Index and the German DAX Index slid by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries moved notably higher on the heels of the monthly jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dropped 5.9 basis points to 2.175 percent.

Looking Ahead

The economic calendar for next week starts off quiet but picks up later in the week with the release of reports on retail sales, producer prices, and industrial production.

On the earnings front, Cisco (CSCO), Kraft Heinz (KHC), Macy's (M), and J.C. Penney (JCP) are among the companies due to report their quarterly results next week.