Stocks Showing A Lack Of Direction After Upbeat Retail Sales - U.S. Commentary

(RTTNews) - Stocks have shown a lack of direction over the course of the trading day on Friday, extending the choppy trading seen in the previous session. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 13.55 points or 0.3 percent at 4,750.89, the Dow is down 26.06 points or 0.2 percent at 17,694.44 and the S&P 500 is down 2.30 points or 0.1 percent at 2,061.81.

The lackluster performance on Wall Street comes following the release of a Commerce Department report showing much stronger than expected retail sales growth in the month of April.

The Commerce Department said retail sales surged up by 1.3 percent in April after slipping by 0.3 percent in March. Economists had expected sales to climb by 0.9 percent.

Excluding a jump in auto sales, retail sales still rose by 0.8 percent in April compared to an upwardly revised 0.4 percent increase in March. Ex-auto sales had been expected to rise by 0.5 percent.

A separate report from the University of Michigan also showed that consumer sentiment jumped to an eleven-month high in May.

While the reports have generated some optimism about the economic outlook, traders seem to be expressing concerns about the possibility of an interest rate hike next month.

In response to the retail sales data, Steve Murphy, U.S. economist at Capital Economics, said a June rate hike by the Federal Reserve is a toss-up.

"The activity data certainly warrants a hike, but separately we are becoming worried that May's employment figures could be pulled down by a couple of big temporary factors," Murphy said.

He added, "Given how cautious the Yellen-led Fed has shown itself to be, the decision next month could go either way."

Among individual stocks, shares of Nvidia (NVDA) have moved sharply higher on the day after the graphics chip maker reported first quarter results that exceeded analyst estimates.

Restaurant chain Shake Shack (SHAK) has also shown a strong move to the upside after reporting better than expected first quarter results and raising its full-year revenue guidance.

Meanwhile, shares of Nordstrom (JWN) have come under pressure after the upscale fashion retailer reported weaker than expected first quarter results and cut its full-year guidance.

Sector News

Many of the major sectors are showing only modest moves in mid-day trading, contributing to the lackluster performance by the broader markets.

Gold stocks are seeing substantial strength, however, with the NYSE Arca Gold Bugs Index surging up by 2.1 percent. Despite the jump, the index remains stuck in a recent trading range.

The strength among gold stocks comes even though the price of gold for June delivery has edged down by $0.20 to $1,271 an ounce.

Significant strength is also visible among biotechnology stocks, as reflected by the 1.8 percent gain being posted by the NYSE Arca Biotechnology Index. The index is rebounding after ending Thursday's trading at its lowest closing level in well over a month.

Celldex Therapeutics (CLDX) and Agios Pharmaceuticals (AGIO) are turning in two of the biotech sector's best performances, jumping by 9 percent and 7.3 percent, respectively.

On the other hand, steel stocks have come under pressure on the day, dragging the NYSE Arca Steel Index down by 1.6 percent. The index is on pace to end the session at a one-month closing low.

Railroad and oil service stocks have also moved to the downside, although selling pressure has remained relatively subdued.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the downside during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.4 percent, while Hong Kong's Hang Seng Index slumped by 1 percent.

Meanwhile, the major European markets all moved higher on the day. While the German DAX Index advanced by 0.9 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 have moved moderately higher after ending the previous session in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.4 basis points at 1.733 percent.