Stocks Continue To Turn In A Lackluster Performance - U.S. Commentary

(RTTNews) - Stocks continue to turn in a lackluster performance in mid-day trading on Thursday after moving notably higher over the two previous sessions. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses on the day. The Dow is down 29.86 points or 0.2 percent at 17,821.65, the Nasdaq is down 1.00 points or less than a tenth of a percent at 4,893.89 and the S&P 500 is down 0.90 points or less than a tenth of a percent at 2,089.64.

The choppy trading on Wall Street comes as traders are digesting the latest batch of U.S. economic data, which has added to recent uncertainty about the outlook for interest rates.

The National Association of Realtors released a report shortly after the start of trading showing that pending home sales surged up to their highest level in a decade in April.

NAR said its pending home sales index surged up by 5.1 percent to 116.3 in April after climbing by 1.6 percent to an upwardly revised 110.7 in March. Economists had expected the index to increase by just 0.8 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the much bigger than expected increase, the pending home sales reached its highest level since hitting 117.4 in February of 2006.

Before the start of trading, the Labor Department also released a report showing a bigger than expected drop in initial jobless claims in the week ended May 21st.

The report said initial jobless claims fell to 268,000, a decrease of 10,000 from the previous week's unrevised level of 278,000. Economists had expected claims to edge down to 275,000.

A separate report from the Commerce Department showed a sharp jump in durable goods orders in April, although the data pointed to continued weakness in business spending.

While the report said durable goods orders shot up by 3.4 percent in April, orders for non-defense capital goods excluding aircraft, a closely watched indicator of capital spending, fell by 0.8 percent.

"As far as the June Fed decision goes, this data has not taken the argument very far forward," said ING Chief International Economist Rob Carnell. "We remain slightly in favor of a July hike, but the outcome remains data dependent."

Reports on first quarter GDP and consumer sentiment may attract attention on Friday along with a speech by Federal Reserve Chair Janet Yellen.

Sector News

Most of the major sectors are showing only modest moves on the day, although considerable weakness is visible among electronic storage stocks.

Reflecting the weakness in the storage sector, the NYSE Arca Disk Drive is down by 2.2 percent after reaching its best closing level in almost a month on Wednesday.

NetApp (NTAP) is posting a notable loss after the storage and data management company reported weaker than expected fourth quarter results and provided disappointing guidance.

Airline stocks have also come under pressure on the day, dragging the NYSE Arca Airline Index down by 1.4 percent. The weakness in the sector may partly reflect concerns about the recent increase in oil prices.

While biotechnology and financial stocks have also moved to the downside on the day, considerable strength has emerged among utilities and steel stocks.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region saw modest strength on Thursday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both inched up by 0.1 percent, while China's Shanghai Composite Index edged up by 0.3 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index closed just above the unchanged line, the French CAC 40 Index and the German DAX Index both advanced by 0.7 percent.

In the bond market, treasuries have moved back to the upside after closing modestly lower in the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3 basis points at 1.840 percent.