Stocks Continue To Show A Lack Of Direction In Mid-Day Trading - U.S. Commentary

(RTTNews) - After ending the previous session mostly higher, stocks have shown a lack of direction throughout the trading day on Friday. Another mixed batch of U.S. economic data is contributing to the choppy trading on Wall Street.

Currently, the major averages continue to turn in a mixed performance. While the S&P 500 is up 1.22 points or 0.1 percent at 1,921.25, the Dow is down 20.02 points or 0.1 percent at 16,678.72 and the Nasdaq is down 1.02 points or less than a tenth of a percent at 4,246.93.

The lackluster performance comes as traders weigh separate reports showing an unexpected drop in personal spending in April and an acceleration in Chicago-area business activity in May.

Before the start of trading, the Commerce Department released a report showing that personal spending edged down by 0.1 percent in April after surging up by 1.0 percent in March. The modest decrease surprised economists, who had expected spending to rise by 0.2 percent.

The unexpected drop in spending came despite a continued increase in personal income, which rose by 0.3 percent in April following a 0.5 percent increase in March. The increase marked the fourth straight month of growth and matched expectations.

Meanwhile, MNI Indicators released a separate report not long after the open showing that its reading on Chicago-area business activity unexpectedly rose to a seven-month high in May.

MNI Indicators said its Chicago business barometer climbed to 65.5 in May from 63.0 in April, with a reading above 50 indicating an increase in activity. The increase surprised economists, who had expected the barometer to dip to 61.0.

Thomson Reuters and the University of Michigan also released a report showing a slight upward revision to their reading on consumer sentiment in May, although it remained below the final April reading.

The data has generated some uncertainty about the near-term outlook for the markets after recent gains lifted the S&P 500 to new record highs.

Among individual stocks, shares of Pacific Sunwear (PSUN) have fallen sharply after the teen apparel retailer reported a narrower than expected first quarter loss but provided disappointing guidance.

Apparel retailer Express (EXPR) has also come under pressure after reporting weaker than expected first quarter earnings and forecasting second quarter earnings below analyst estimates.

On the other hand, shares of Big Lots (BIG) are seeing substantial strength after the closeout retailer reported better than expected first quarter earnings and raised its full-year earnings outlook.

Sector News

While most of the major sectors are showing only modest moves, considerable weakness remains visible among steel stocks. The NYSE Arca Steel Index has plunged by 2 percent, falling to its lowest intraday level in almost a month.

U.S. Steel (X) and Cliffs Natural Resources (CLF) are turning in two of the steel sector's worst performances, tumbling by 4.3 percent and 4 percent, respectively.

Significant weakness has also emerged among electronic storage stocks, as reflected by the 1.5 percent loss being posted by the NYSE Arca Disk Drive Index. With the drop, the index is pulling back further off the nearly one-month closing high it set on Tuesday.

Gold stocks are also under pressure amid a notable decrease by the price of the precious metal, while utilities and commercial real estate stocks are seeing modest strength on the day.

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 0.3 percent, while China's Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets ended the day mixed. While the German DAX Index closed just above the unchanged line, the U.K.'s FTSE 100 Index and the French CAC 40 Index fell by 0.4 percent and 0.2 percent, respectively.

In the bond market, treasuries are giving back some ground after moving notably higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.3 basis points at 2.47 percent.