Stocks Close Mixed Following Lackluster Session - U.S. Commentary

(RTTNews) - After starting the new year on an upbeat note, stocks turned in a relatively lackluster performance during trading on Thursday. Despite the choppy trading, the tech-heavy Nasdaq managed to end the day at a new record closing high.

The major averages closed on opposite sides of the unchanged line. While the Nasdaq rose 10.93 points or 0.2 percent to 5,487.94, the Dow dipped 42.87 points or 0.2 percent to 19,899.29 and the S&P 500 edged down 1.75 points or 0.1 percent to 2,269.00.

The choppy trading on Wall Street may have reflected trepidation ahead of the release of the Labor Department's monthly jobs report on Friday.

The minutes of the latest Federal Reserve meeting suggested interest rates could be raised more quickly than currently anticipated if unemployment substantially undershoots the longer-run normal rate.

Employment is expected to increase by about 175,000 jobs in December, while the unemployment rate is expected to tick up to 4.7 percent.

A report released by payroll processor ADP this morning showed weaker than expected private sector job growth in the month of December.

ADP said private sector employment climbed by 153,000 jobs in December after jumping by a revised 215,000 jobs in November. Economists had expected an increase of about 172,000 jobs.

Meanwhile, a separate report from the Labor Department said first-time claims for U.S. unemployment benefits fell by much more than expected in the week ended December 31st.

The report said initial jobless claims dropped to 235,000, a decrease of 28,000 from the previous week's revised level of 263,000. Economists had expected jobless claims to edge down to 260,000.

The Institute for Supply Management also released a report showing that service sector activity maintained its rate of growth in December.

The ISM said its non-manufacturing index came in at 57.2 in December, unchanged from the November figure. A reading above 50 indicates growth in the service sector.

Economists had expected the non-manufacturing index to show a modest decrease, with the consensus estimate calling for a reading of 56.8.

Sector News

Many of the major sectors ended the day showing only modest moves, although substantial strength was visible among gold stocks. The NYSE Arca Gold Bugs Index spiked by 6.3 percent to its best closing level in almost two months.

The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for February delivery jumping $16 to $1,181.30 an ounce.

Considerable strength was also visible among pharmaceutical stocks, as reflected by the 1.2 percent advance by the NYSE Arca Pharmaceutical Index. With the gain, the index reached a nearly two-month closing high.

On the other hand, banking stocks moved to the downside on the day, dragging the Dow Jones Banks Index down by 1.4 percent. The index pulled back off the nearly nine-year closing high set in the previous session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday. Hong Kong's Hang Seng Index jumped by 1.5 percent, while Australia's All Ordinaries Index rose by 0.3 percent. However, Japan's Nikkei 225 Index bucked the uptrend and fell by 0.4 percent.

The major European markets ended the day slightly higher. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index and the German DAX Index both closed just above the unchanged line.

In the bond market, treasuries moved notably higher after closing nearly flat in the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slumped by 8.4 basis points to 2.368 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the Labor Department's closely watched monthly employment report for December.

The jobs data is likely to overshadow separate reports on international trade and factory orders as well as speeches by several Federal Reserve officials.