Stocks Close Mixed Following Lackluster Trading Session - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout the trading day on Friday before ending the session mixed. Another mixed batch of U.S. economic data contributed to the choppy trading on Wall Street, although the S&P 500 still managed to reach a new record closing high.

The major averages finished the session on opposite sides of the unchanged line. While the Nasdaq edged down 5.33 points or 0.1 percent to 4,242.62, the Dow inched up 18.43 points or 0.1 percent to 16,717.17 and the S&P 500 crept up 3.54 points or 0.2 percent to 1,923.57.

Despite the mixed performance on the day, the major averages all moved higher for the week. The Dow advanced by 0.7 percent, while the Nasdaq and the S&P 500 jumped 1.4 percent and 1.2 percent, respectively.

The lackluster performance on the day came as traders weighed separate reports showing an unexpected drop in personal spending in April and an acceleration in Chicago-area business activity in May.

Before the start of trading, the Commerce Department released a report showing that personal spending dipped by 0.1 percent in April after surging up by 1.0 percent in March. The modest decrease surprised economists, who had expected spending to rise by 0.2 percent.

The unexpected drop in spending came despite a continued increase in personal income, which rose by 0.3 percent in April following a 0.5 percent increase in March. The increase marked the fourth straight month of growth and matched expectations.

Meanwhile, MNI Indicators released a separate report not long after the open showing that its reading on Chicago-area business activity unexpectedly rose to a seven-month high in May.

MNI Indicators said its Chicago business barometer climbed to 65.5 in May from 63.0 in April, with a reading above 50 indicating an increase in activity. Economists had expected the barometer to dip to 61.0.

Thomson Reuters and the University of Michigan also released a report showing a slight upward revision to their reading on consumer sentiment in May, although it remained below the final April reading.

The data generated some uncertainty about the near-term outlook for the markets amid the S&P 500's recent trek to new record highs.

Among individual stocks, shares of Pacific Sunwear (PSUN) fell sharply after the teen apparel retailer reported a narrower than expected first quarter loss but provided disappointing guidance.

Apparel retailer Express (EXPR) also came under pressure after reporting weaker than expected first quarter earnings and forecasting second quarter earnings below analyst estimates.

On the other hand, shares of Big Lots (BIG) saw substantial strength after the closeout retailer reported better than expected first quarter earnings and raised its full-year earnings outlook.

Sector News

While most of the major sectors ended the session showing only modest moves, considerable weakness was visible among steel stocks. The NYSE Arca Steel Index plunged by 2 percent, falling to a two-month closing low.

Cliffs Natural Resources (CLF) and U.S. Steel (X) turned in two of the steel sector's worst performances, tumbling by 5.5 percent and 4.6 percent, respectively.

Electronic storage stocks also saw significant weakness, dragging the NYSE Arca Disk Drive Index down by 1.5 percent. With the drop, the index pulled back further off the nearly one-month closing high it set on Tuesday.

Networking and internet stocks also moved o the downside on the day, while notable strength emerged among gold and utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index dropped by 0.3 percent, while China's Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets ended the day mixed. While the German DAX Index closed just above the unchanged line, the U.K.'s FTSE 100 Index and the French CAC 40 Index fell by 0.4 percent and 0.2 percent, respectively.

In the bond market, treasuries recovered from an early move to the downside but still closed modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1 basis point to 2.457 percent after reaching a high of 2.491 percent.

Looking Ahead

Next week, the monthly jobs report is likely to be in focus along with the latest monetary policy decision by the European Central Bank.

Ahead of both the jobs report and the ECB meeting, trading could be impacted by reports on manufacturing activity, private sector employment, and international trade as well as the Federal Reserve's Beige Book.