Stocks Seeing Modest Strength Following Recent Pullback - U.S. Commentary

(RTTNews) - Stocks have moved modestly higher in early trading on Friday, regaining some ground after trending lower over the past few sessions. The major averages have all moved to the upside, although buying interest has remained subdued.

The major averages have pulled back off their highs for the young session but are currently clinging to slim gains. The Dow is up 7.77 points or 0.1 percent at 15,747.20, the Nasdaq is up 7.60 points or 0.2 percent at 4,006.01 and the S&P 500 is up 1.35 points or 0.1 percent at 1,776.85.

The early strength on Wall Street is partly due to bargain hunting, with some traders picking up stocks at reduced levels following the recent pullback.

With worries about the outlook for the Federal Reserve's stimulus program weighing on the markets, the Dow and the S&P 500 both ended Thursday's trading at their worst closing levels in a month.

Traders seem somewhat reluctant to buy stocks, however, as news that the House voted to approve a bipartisan budget bill to keep the U.S. government operating for the next two fiscal years has added to recent worries about the Fed.

The House voted 332 to 94 in favor of the bill, which was outlined Tuesday by Rep. Paul Ryan, R-Wis., and Senator Patty Murray, D-Wash.

The budget plan erases the threat of another government shutdown in January and also addresses some of the automatic spending cuts known as the sequester.

Meanwhile, traders have largely shrugged off a report from the Labor Department showing a modest decrease in producer prices in the month of November.

The Labor Department said its producer price index edged down by 0.1 percent in November following a 0.2 percent drop in October. The modest decrease matched economist estimates.

"Wholesale prices fell for the third straight month on lower energy and motor vehicle costs, showing little pipeline pressure for increased consumer prices," said Jay Morelock, an economist at FTN Financial.

He added, "With crude and intermediate goods falling as well, the Fed will not be concerned with upward price pressure as they head into their meeting next week to consider tapering asset purchases."

Core producer prices, which exclude food and energy prices, inched up by 0.1 percent in November after rising by 0.2 percent in October. The uptick in core prices also matched expectations.

Gold, housing, and commercial real estate stocks are seeing some early strength, although most of the major sectors are showing only modest moves.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 2225 Index rose by 0.4 percent, while China's Shanghai Composite Index fell by 0.3 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has risen by 0.3 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both up by 0.2 percent.

In the bond market, treasuries are seeing modest strength after coming under pressure over the course of the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.868 percent.