Stocks Finish Lackluster Session Moderately Higher - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout much of the trading day on Friday but managed to end the session moderately higher. The Dow and the S&P 500 reached nearly two-month closing highs, while the Nasdaq rose to its best levels in a month.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow rose 74.22 points or 0.4 percent to 17,215.97, the Nasdaq edged up 16.59 points or 0.3 percent to 4,886.69 and the S&P 500 climbed 9.25 points or 0.5 percent to 2,033.11.

With the gains on the day, the major averages all moved higher for the week. The Dow and the S&P 500 advanced by 0.8 percent and 0.9 percent, respectively, while the Nasdaq surged up by 1.2 percent.

The higher close on Wall Street seemed to reflect the recent upward momentum for the markets, with stocks continuing to recover from the sell-off seen in mid-August.

The markets have recently benefited from signs that the Federal Reserve will hold off on raising interest rates, although lingering concerns about the global economy have limited the upside.

On the U.S. economic front, the Fed released a report before the start of trading showing a modest drop in industrial production in September.

The report said industrial production fell by 0.2 percent in September after edging down by a revised 0.1 percent in August. The modest decrease was primarily due to the steep drop in mining output.

A separate report from the University of Michigan showed a bigger than expected rebound in consumer sentiment in the month of October.

The University of Michigan said the preliminary reading on its consumer sentiment index for October came in at 92.1 compared to the final September reading of 87.2. Economists had expected the index to rise to 89.5.

Richard Curtin, the survey's chief economist, said, "The rebound in confidence signifies that consumers have concluded that the fears expressed on Wall Street did not extend to Main Street."

"Importantly, the renewed confidence did not simply represent a relief rally, but instead reflected renewed optimism," he added.

Among individual stocks, shares of Youku Tudou (YOKU) moved sharply higher on news Alibaba (BABA) has offered to acquire the portion of the digital entertainment provider it does not already own.

Toy maker Mattel (MAT) also turned in a strong performance on the day even though the company reported weaker than expected third quarter results.

On the other hand, shares of Quanta Services (PWR) showed a steep drop after the contracting services provider lowered its third quarter guidance.

Sector News

Despite the higher close by the broader markets, gold stocks saw substantial weakness on the day. The NYSE Arca Gold Bugs Index tumbled by 3.1 percent, pulling back further off the three-month closing high set on Wednesday.

The weakness among gold stocks came amid a decrease by the price of precious metal, with gold for December delivery sliding $4.40 to $1,183.10 an ounce.

Oil service stocks also came under significant selling pressure, resulting in a 2.4 percent drop by the Philadelphia Oil Service Index. Schlumberger (SLB) posted a notable loss after reporting weaker than expected third quarter revenues.

Electronic storage, transportation, and steel stocks also saw considerable weakness on the day, while strength was visible among pharmaceutical stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday following the rally seen on Wall Street overnight. Japan's Nikkei 225 Index jumped by 1.1 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

The major European markets also moved to the upside on the day. While the German DAX Index rose by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both climbed by 0.6 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day unchanged at 2.023 percent.

Looking Ahead

Earnings news is likely to be in focus next week, with American Express (AXP), Boeing (BA), Caterpillar (CAT), Coca-Cola (KO), IBM (IBM), McDonald's (MCD), Microsoft (MSFT), Procter & Gamble (PG), and Travelers (TRV) among the companies due to report their quarterly results.

The economic calendar for next week is relatively quiet, although traders are likely to keep an eye on reports on homebuilder confidence, housing starts, and existing home sales.