Stocks Close Roughly Flat Ahead Of Monthly Jobs Report - U.S. Commentary

(RTTNews) - With traders looking ahead to the release of the closely watched monthly jobs report, stocks turned in another lackluster performance during trading on Thursday before closing roughly flat.

The major averages ended the day mixed for the second consecutive session. While the S&P 500 inched up 0.64 points or less than a tenth of a percent to 1,838.13, the Dow edged down 17.98 points or 0.1 percent to 16,444.76 and the Nasdaq dipped 9.42 points or 0.3 percent to 4,156.19.

The choppy trading on Wall Street came as traders seemed reluctant to make any significant moves ahead of Friday's report on the employment situation in the month of December.

Economists expect an increase of about 200,000 jobs in December, while the unemployment rate is expected to remain at 7.0 percent.

Ahead of the monthly report, the Labor Department released a report this morning showing that initial jobless claims fell by more than expected in the week ended January 4th.

The report said jobless claims dropped to 330,000 from the previous week's revised figure of 345,000, while economists had expected jobless claims to fall to 335,000.

The jobless claims data combined with yesterday's better than expected private sector jobs report has led some to believe that the monthly report could show an increase in jobs in excess of 200,000.

While strong job growth would be a positive for the economic outlook, it would also further solidify expectations that the Fed will continue to scale back its asset purchase program in the coming months.

The minutes of the Fed's December meeting led several economists to reiterate predictions that the central bank will continue to will taper by $10 billion per meeting until the program ends.

Among individual stocks, shares of Bed Bath & Beyond (BBBY) moved sharply lower after the retailer reported weaker than excepted third quarter earnings and cuts its outlook.

Pier 1 Imports (PIR) also came under pressure after reporting December comparable store sales growth that came in well below expectations.

On the other hand, shares of Macy's (M) moved notably higher after the department store operator provided upbeat guidance for 2014 and announced plans to cut 2,500 jobs as part of a reorganization.

Sector News

After ending the previous session notably higher, networking stocks showed a sharp pullback on the day. The NYSE Arca Networking Index tumbled by 1.7 percent after ending Wednesday's trading at its best closing level in well over two years.

Adtran (ADTN) and Alcatel-Lucent (ALU) turned in two of the networking sector's worst performances, falling by 5.5 percent and 5.4 percent, respectively.

Gold stocks also came under pressure, dragging the NYSE Arca Gold Bugs Index down by 1.5 percent. The weakness among gold stocks came despite an increase by the price of the precious metal.

Telecom, electronic storage, and steel stocks also moved to the downside, with the NYSE Arca Steel Index moving lower for the sixth straight session.

On the other hand, biotechnology stocks moved notably higher on the day, driving the NYSE Arca Biotechnology Index up by 1.3 percent. With the gain, the index reached a new record closing high.

Transportation stocks also saw notable strength, resulting in a 1 percent gain by the Dow Jones Transportation Average. United Continental (UAL) helped lead the sector higher after the airline said its per-seat revenue rose as much as 12.5 percent in December.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index tumbled by 1.5 percent, while Hong Kong's Hang Seng Index dropped by 0.9 percent.

The major European markets also came under pressure over the course of the session. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the French CAC 40 Index and the German DAX Index both ended the day down by 0.8 percent.

In the bond market, treasuries saw some volatility on the day before closing moderately higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 3 basis points to 2.963 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the Labor Department's monthly jobs report, which is scheduled to be released at 8:30 am ET.

The jobs report is likely to overshadow the release of quarterly results of from Alcoa (AA) after the close of today's trading. While the aluminum giant is no longer a Dow component, the release of its results is still seen as the unofficial start of earnings season.