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

(RTTNews) - Following the mixed performance seen in the previous session, stocks showed a lack of direction over the course of the trading session on Friday. The major averages spent the day bouncing back and forth across the unchanged line before roughly flat.

While the Dow dipped 21.51 points or 0.1 percent to 19,170.42 after ending the previous session at a record closing high, the Nasdaq edged up 4.55 points or 0.1 percent to 5,255.65 and the S&P 500 crept up 0.87 points or less than a tenth of a percent to 2,191.95.

The major averages also turned in a mixed performance for the week. The Dow inched up by 0.1 percent, while the Nasdaq plunged by 2.7 percent and the S&P 500 slumped by 1 percent.

The choppy trading on Wall Street comes following the release of the Labor Department's closely watched monthly employment report for November.

The report said non-farm payroll employment climbed by 178,000 jobs in November following a downwardly revised increase of 142,000 jobs in October.

Economists had expected employment to increase by about 170,000 jobs compared to the addition of 161,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate fell to 4.6 percent in November from 4.9 percent in October. The unemployment rate had been expected to remain unchanged.

With the unexpected decrease, the unemployment rate fell to its lowest level since hitting a matching rate in August of 2007.

The unexpected drop by the unemployment rate partly reflected a decrease in labor force participation, with the participation rate edging down to 62.7 in November from 62.8 in October.

The report also said average hourly employee earnings fell by $0.03 to $25.89 in November. The annual rate of wage growth subsequently slowed to 2.5 percent from 2.8 percent.

Nonetheless, the stronger than expected job growth shown by the report is likely reinforce expectations that the Federal Reserve will rates interest rates at its next meeting later this month.

"That weak wage figure will probably raise a few eyebrows among some of the more dovish Fed voters," said James Smith, Developed Markets Economist at ING. "But it would have had to have been a really disastrous jobs report to have derailed the FOMC's plans to hike in December."

He added, "In fact, assuming that the latest wage growth figure was a blip, we still think that the labor market is strong enough to support two hikes from the FOMC next year."

Traders may also have been reluctant to make more significant moves ahead of an Italian referendum of an overhaul of the country's legislature on Sunday.

Sector News

Despite the relatively lackluster performance by the broader markets, gold stocks showed a substantial move to the upside. Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index surged up by 3.5 percent.

The gains by gold stocks came amid a rebound by the price of the precious metal, with gold for February delivery climbing $8.40 to $1,177.80 an ounce after hitting a ten-month low on Thursday.

Semiconductor stocks also turned in a strong performance, regaining some ground after falling sharply in the previous session. After plunging by 4.9 percent on Thursday, the Philadelphia Semiconductor Index climbed by 1.3 percent.

Steel, electronic storage, and airline stocks also notable strength on the day, while financial stocks gave back some ground following recent gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index dropped by 0.5 percent, while Hong Kong's Hang Seng Index tumbled by 1.4 percent.

The major European markets also ended the day lower but off their worst levels. While the French CAC 40 Index slid by 0.7 percent, the U.K.'s FTSE 100 Index and the German DAX Index edged down by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries regained some ground after moving sharply lower over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.1 basis points to 2.390 percent.

Looking Ahead

Next week's trading may be impacted by reaction to reports on service sector activity, international trade, labor productivity, and consumer sentiment.

On the earnings front, AutoZone (AZO), Toll Brothers (TOL), Costco (COST), H&R Block (HRB), and Ciena (CIEN) are among the company's due to report their quarterly results next week.