U.S. Stocks Turning In Lackluster Performance Following Recent Strength

(RTTNews) - After an initial move to the upside, stocks have shown a lack of direction over the course of the trading session on Friday. The major averages pulled back off their early highs and have been bouncing back and forth across the unchanged line.

Currently, the major averages are narrowly mixed. While the Nasdaq is down 23.48 points or 0.2 percent at 13,759.34, the Dow is up 19.69 points or 0.1 percent at 34,427.75 and the S&P 500 is up 3.59 points or 0.1 percent at 4,429.43.

The choppy trading on Wall Street comes as some traders are taking a breather to assess the near-term outlook for the markets following recent strength.

The S&P 500 and the Nasdaq once again reached their best closing levels in over a year on Thursday, while the Dow set a new six-month closing high.

"U.S. stocks are ready for a long weekend as traders are exhausted from a week filled with high impact events that didn't derail momentum in equities," said Edward Moya, senior market analyst at OANDA.

"The Nasdaq might be underperforming today compared to Dow and S&P 500, but don't let that fool you," he added. "Wall Street remains upbeat that the AI wave won't be going away anytime soon and that investors will prefer US stocks as we see diverging central bank policies worldwide."

Following yesterday's avalanche of data, the U.S. economic calendar is relatively quiet today, although the University of Michigan released a report showing a bigger than expected improvement in U.S. consumer sentiment in the month of June.

The University of Michigan said is consumer sentiment index climbed to 63.9 in June from 59.2 in May. Economists had expected in the index to inch up to 60.0.

The report also showed a significant decrease in year-ahead inflation expectations, which tumbled to 3.3 percent in June from 4.2 percent in May, hitting the lowest level since March 2021.

Five-year inflation expectations edged down to 3.0 percent in June from 3.1 percent in May, again staying within the narrow 2.9-3.1 percent range for 22 of the last 23 months.

The decrease inflation expectations may add to recent investor optimism that the Federal Reserve won't follow through on its plan to continue raising rates.

CME Group's FedWatch Tool is currently pointing to just one quarter point rate hike by the end of the year compared to the two forecast by the Fed.

Sector News

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

Telecom stocks have shown a notable move to the downside, however, with the NYSE Arca North American Telecom Index falling by 1.1 percent.

Tobacco, steel and computer hardware stocks are also seeing some weakness on the day, although selling pressure has remained relatively subdued.

On the other hand, gold stocks have moved notably higher amid a modest increase by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 1.0 percent.

Interest rate-sensitive utilities stocks are also seeing some strength on the day, moving higher along with airline and natural gas stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index advanced by 0.7 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index surged by 1.3 percent, the German DAX Index rose by 0.4 percent and the U.K.'s FTSE 100 Index edged up by 0.2 percent.

In the bond market, treasuries are giving back ground after moving higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.5 basis points at 3.773 percent.