U.S. Stocks Showing A Lack Of Direction Following Recent Upward Trend

(RTTNews) - After moving sharply higher in the previous session, stocks have shown a lack of direction over the course of the trading day on Friday. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 34.75 points or 0.1 percent at 40,528.31, the Nasdaq is down 32.06 points or 0.2 percent at 17,562.44 and the S&P 500 is down 8.49 points or 0.2 percent at 5,534.73.

The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets following recent strength, which saw the Nasdaq and the S&P 500 close higher for six consecutive sessions.

The recent upward trend has seen the major averages largely offset the sell-off seen early this month, although they remain well off the record highs set in July.

Traders may be questioning what the next catalyst for the markets will be after recent data eased concerns about the economic outlook while also increasing confidence the Federal Reserve will cut interest rates next month.

While yesterday's upbeat retail sales data has reduced the likelihood of a 50 basis point rate cut, the Fed is still widely expected to cut rates by at least 25 basis points.

In U.S. economic news, preliminary data released by the University of Michigan showed consumer sentiment in the U.S. has improved by more than expected in the month of August.

The University of Michigan said its consumer sentiment index rose to 67.8 in August after falling to 66.4 in July. Economists had expected the index to inch up to 66.9.

The consumer sentiment index regained ground after hitting its lowest level since November 2023 in the previous month.

On the inflation front, the report said year-ahead and long-term inflation expectations were both unchanged from the previous month at 2.9 percent and 3.0 percent, respectively.

Meanwhile, the Commerce Department released a report showing a sharp pullback by new residential construction in the month of July.

The report said housing starts plunged by 6.8 percent to an annual rate of 1.238 million in July after jumping by 1.1 percent to a revised rate of 1.329 million in June.

Economists had expected housing starts to slump by 1.7 percent to an annual rate of 1.330 million from the 1.353 million originally reported for the previous month.

With the sharp pullback, housing starts tumbled to their lowest level since hitting an annual rate of 1.053 million in May 2020.

The Commerce Department said building permits also plummeted by 7.0 percent to an annual rate of 1.396 million in July after surging by 3.9 percent to a revised rate of 1.454 million in June.

Building permits, an indicator of future housing demand, were expected to decrease by 1.1 percent to an annual rate of 1.430 million from the 1.446 million originally reported for the previous month.

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broad markets.

Gold stocks have shown a notable move to the upside, however, with the NYSE Arca Gold Bugs Index climbing by 1.2 percent.

The strength among gold stocks comes as the price of gold for December delivery is surging $30.70 to $2,523.10 an ounce.

On the other hand, airline and semiconductor stocks are giving back ground after turning in some of the market's best performances on Thursday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Friday. Japan's Nikkei 225 Index spiked by 3.6 percent, while Hong Kong's Hang Seng Index shot up by 1.9 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is down by 0.3 percent, the French CAC 40 Index is up by 0.2 percent and the German DAX Index is up by 0.7 percent.

In the bond market, treasuries are regaining ground following the sharp pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.2 basis points at 3.904 percent.