Stocks Showing A Lack Of Direction In Early Trading - U.S. Commentary

(RTTNews) - After moving notably higher over the two previous sessions, stocks are turning in a relatively lackluster performance in early trading on Thursday. The major averages have been bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance on the day. While Nasdaq is up 4.94 points or 0.1 percent at 4,899.83, the Dow is down 16.88 points or 0.1 percent at 17,834.63 and the S&P 500 is down just 0.03 points at 2.090.51.

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

The National Association of Realtors recently released a report 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."

Most of the major sectors are showing only modest moves on the day, although considerable weakness has emerged among electronic storage stocks. The NYSE Arca Disk Drive is down by 2.3 percent after reaching its best closing level in almost a month on Wednesday.

Airline and biotechnology stocks have also moved to the downside, while strength is visible among steel and gold stocks.

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.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.'s FTSE 100 Index is down by 0.1 percent, the French CAC 40 Index is up by 0.7 percent and the German DAX Index is up by 0.8 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 2.4 basis points at 1.846 percent.