Stocks Give Back Ground After Seeing Initial Strength - U.S. Commentary

(RTTNews) - After initially moving to the upside, stocks have given back some ground over the course of early trading on Friday. The major averages have pulled back well off their highs for the young session, with the Nasdaq and the S&P 500 sliding into negative territory.

Currently, the major averages are turning in a mixed performance, as the Dow is clinging to a modest gain. While the Dow is up 13.10 points or 0.1 percent at 17,836.17, the Nasdaq is down 15.33 points or 0.3 percent at 4,720.73 and the S&P 500 is down 3.19 points or 0.2 percent at 2,055.71.

The strength seen at the open was partly due to comments from European Central Bank president Mario Draghi adding to speculation that the bank will provide further stimulus.

In an interview with German financial daily Handelsblatt, Draghi said that the risk of deflation in the euro area has risen and said the ECB is preparing to react to such a threat.

Draghi's comments suggested that the ECB is moving closer to unleashing full-blown quantitative easing, including sovereign bond purchases.

However, the early buying interest was offset by the release of a pair of disappointing economic reports, including a report from the Institute for Supply Management showing that its index of activity in the manufacturing sector fell more than expected.

The ISM said its purchasing managers index fell to 55.5 in December from 58.7 in November, although a reading above 50 indicates continued growth in the manufacturing sector. Economists had expected the index to drop to 57.5.

With the bigger than expected decrease, the ISM's manufacturing index fell to its lowest level since hitting 55.3 in June.

A separate report from the Commerce Department showing an unexpected drop in construction spending in November also generated some negative sentiment.

Trucking stocks have shown a substantial move to the downside since then, dragging the Dow Jones Trucking Index down by 1.7 percent. The index is pulling back further off the record closing high it set Christmas Eve.

Steel, energy, and railroad stocks have also come under pressure, while some strength remains visible among commercial real estate stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, although several markets remained closed on the day. Hong Kong's Hang Seng Index surged up by 1.1 percent, while Australia's All Ordinaries Index climbed by 0.5 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.4 percent, the French CAC 40 Index and the German DAX Index are both down by 0.3 percent.

In the bond market, treasuries have moved notably higher on the heels of the disappointing U.S. economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.6 basis points at 2.114 percent.