Stocks Show A Lack Of Direction Before Closing Mixed - U.S. Commentary

(RTTNews) - Following the sharp pullback seen in the previous session, stocks fluctuated over the course of the trading day on Friday before closing mixed.

While the Dow posted a modest gain on the day, the Nasdaq and the S&P 500 closed in the red. The Dow crept up 28.64 points or 0.2 percent to 16,469.99, while the Nasdaq fell 11.16 points or 0.3 percent to 4,131.91, and the S&P 500 edged down 0.61 points or less than a tenth of a percent to 1,831.37.

The major averages all moved lower for the week due largely to the weakness seen on Thursday. The Dow dipped by 0.1 percent, and the Nasdaq and the S&P 500 dropped by 0.6 percent and 0.5 percent, respectively.

The choppy trading seen for much of the session came as traders seemed somewhat reluctant to make any significant news amid a quiet day on the U.S. economic front.

Traders still kept an eye on comments from several Federal Reserve officials, including a speech by Fed Chairman Ben Bernanke.

In remarks at the American Economic Association's annual meeting in Philadelphia, Bernanke offered a vigorous defense of the unprecedented measures taken under his watch to spur the U.S. economy after the worst recession in decades.

"Skeptics have pointed out that the pace of recovery has been disappointingly slow, with inflation-adjusted GDP growth averaging only slightly higher than a 2 percent annual rate over the past few years and inflation below the Committee's 2 percent longer-term target," Bernanke said.

He added, "However, the recovery has faced powerful headwinds, suggesting that economic growth might well have been considerably weaker, or even negative, without substantial monetary policy support."

Bernanke also noted that the Fed's recent decision to begin scaling back its asset purchases did not indicate any diminution of its commitment to maintain a highly accommodative monetary policy for as long as needed.

The speech is expected to be one of Bernanke's last public appearances before the end of his eight-year run as the Chairman of the Fed at the end of the month.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Bernanke's last major speech before he exits stage left is providing no new information on the future of policy that Janet Yellen will lead but is more a pat on the back of himself for what he has done since the crisis began."

Sector News

While most of the major sectors ended the day showing only modest moves, considerable strength was visible among airline stocks. The NYSE Arca Airline Index surged up by 3.8 percent to its best closing level in over eleven years.

Delta (DAL) helped to lead the airline sector higher, jumping by 5.5 percent after reporting better than expected December revenues.

Computer hardware and banking stocks also moved significantly higher on the day, while gold and telecom stocks showed notable moves to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Hong Kong's Hang Seng Index plummeted by 2.2 percent, while China's Shanghai Composite Index tumbled by 1.2 percent. The Japanese markets remained closed.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index rose by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries closed modestly lower after fluctuating over the course of the trading day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1 basis point to 2.995 percent.

Looking Ahead

Following two holiday-interrupted weeks, trading activity may remain somewhat subdued next week in the days leading up to the release of the monthly jobs report on Friday.

Ahead of the jobs report, trading could be impacted by the release of reports on factory orders, service sector activity, and international trade. The Fed is also due to release the minutes of its December meeting.