Stocks Close Nearly Flat Following Another Choppy Trading Day - U.S. Commentary

(RTTNews) - Extending the lackluster performance seen throughout much of the week, stocks showed a lack of direction during trading on Friday before closing roughly flat. The major averages spent the day bouncing back and forth across the unchanged line.

For the fourth time in five sessions, the major averages ended the day mixed. While the Nasdaq edged down 5.94 points or 0.1 percent to 4,632.53, the Dow inched up 19.46 points or 0.1 percent to 17,573.93 and the S&P 500 crept up 0.71 points or less than a tenth of a percent to 2,031.92.

For the week, the Nasdaq inched slightly higher, while the Dow jumped by 1.1 percent and the S&P 500 advanced by 0.7 percent. The Dow and the S&P 500 both reached new record closing highs.

A mixed reaction to the Labor Department's closely watched monthly employment report contributed to the choppy trading on Wall Street.

While the report showed weaker than expected job growth in the month of October, the unemployment rate still fell to a new six-year low.

The Labor Department said non-farm payroll employment rose by 214,000 jobs in October compared to economist estimates for an increase of about 235,000 jobs.

Nonetheless, the job growth helped push the unemployment rate down to 5.8 percent in October from 5.9 percent in September. With the drop, the unemployment rate hit its lowest level since July of 2008.

The data points to continued strength in the economy but also raised some concerns about the outlook for interest rates.

Peter Boockvar, managing director at the Lindsey Group, said, "The unemployment rate of 5.8% is not too far from the Fed's year end 2015 target range of 5.4-5.6% thus putting the Fed even further behind the ball. Expect a March rate hike."

Uncertainty about the near-term outlook for the markets also contributed to the lackluster performance following the recent strength in the markets.

Among individual stocks, shares of Salix Pharmaceuticals (SLXP) moved sharply lower on the day after the developer of drugs and medical devices reported weaker than expected third quarter results and provided disappointing guidance.

Healthcare information technology company Allscripts Healthcare (MDRX) also came under pressure after reporting third quarter results that came in below analyst estimates.

Meanwhile, shares of Sears Holding (SHLD) spiked higher after the retailer said it is considering the sale of up to 300 stores to boost liquidity.

Sector News

While most of the major sectors ended the day showing only modest moves, substantial strength was visible among gold stocks. The NYSE Arca Gold Bugs Index soared by 7.9 percent, climbing further off the eleven-year closing low set on Wednesday.

The continued recovery by gold stocks came amid a sharp increase by the price of the precious metal, with gold for December delivery jumping $27.20 to $1,169.80 an ounce.

Energy stocks also turned in a strong performance, moving higher along with the price of crude oil. Crude for December delivery climbed $0.74 to $78.65 a barrel, continuing to recover from the three-year closing low set on Tuesday.

Steel, networking, and utilities stocks also saw some strength on the day, although buying interest was relatively subdued.

On the other hand, biotechnology stocks came under pressure on the day, dragging the NYSE Arca Biotechnology Index down by 1.3 percent. With the drop, the index extended the pullback off Monday's record closing high.

Healthcare, telecom, and airline stocks also moved to the downside, offsetting the strength seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index edged up by 0.3 percent, the French CAC 40 Index and the German DAX Index both dropped by 0.9 percent.

In the bond market, treasuries saw notable strength after trending lower over the past few weeks. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.3 basis points to 2.312 percent.

Looking Ahead

The U.S. economic calendar for next week is relatively quiet amid the Veterans Day holiday on Tuesday, although traders are likely to keep an eye on reports on weekly jobless claims, retail sales, and consumer sentiment.

On the earnings front, Wal-Mart (WMT), Cisco Systems (CSCO), Macy's (M), and Tyco (TYC) are among the companies due to report their quarterly results next week.