Stocks Close Nearly Flat Ahead Of Monthly Jobs Report - U.S. Commentary

(RTTNews) - After ending the previous session sharply higher, stocks showed a lack of direction throughout the trading day on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line before ending the session mixed.

While the Nasdaq edged down 0.92 points or less than a tenth of a percent to 4,457.73, the Dow crept up 20.17 points or 0.1 percent to 16,976.24 and the S&P 500 inched up 1.30 points or 0.1 percent to 1,974.62.

Despite the lackluster performance, the modest gains still lifted the Dow and the S&P 500 to new record closing highs.

The choppy trading on Wall Street came as traders seemed reluctant to make any significant moves ahead of the release of the closely watched monthly jobs report on Thursday.

The Labor Department report, which is being released a day earlier than normal due to the holiday on Friday, is expected to show an increase of about 210,000 jobs.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "Overall, an increase in official payrolls by at least 200,000 in June would probably be enough to reduce the unemployment rate to 6.2%, from 6.3% in May."

"Given the recent volatility of the GDP data, the strength of the labor market will play a greater role in the Fed's thinking," he added.

Amid the focus on the Labor Department report, traders largely shrugged off a report from payroll processor ADP showing that private sector employment increased by much more than anticipated in the month of June.

ADP said employment in the private sector surged up by 281,000 jobs in June following an increase of 179,000 jobs in May. Economists had been expecting employment to climb by about 205,000 jobs.

The substantial private sector job growth in June reflected the biggest monthly increase in employment since November of 2012.

Among individual stocks, shares of Vitacost.com (VITC) moved sharply higher on the day after the online vitamin retailer agreed to be acquired by supermarket giant Kroger (KR) for approximately $280 million or $8 per share.

Shutterfly (SFLY) also showed a strong move to the upside after Bloomberg reported that the online photo-printing service has hired boutique investment bank Qatalyst Partners to find buyers for the company.

On the other hand, shares of CalAmp (CAMP) came under pressure after the wireless technology provider reported better than expected first quarter earnings but forecast second quarter results below analyst estimates.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Airline stocks saw substantial weakness on the day, however, with the NYSE Arca Airline Index tumbling by 2.3 percent. With the loss, the index offset the strong gain posted on Tuesday.

United Continental (UAL) and Delta (DAL) turned in two of the airline sector's worst performances, falling by 7.1 percent and 5.1 percent, respectively.

Considerable weakness was also visible among utilities stocks, as reflected by the 1.9 percent loss posted by the Dow Jones Utilities Average. The drop pulled the average down further off the record closing high it set on Monday.

Meanwhile, steel stocks saw significant strength on the day amid optimism about the outlook for demand. The NYSE Arca Steel Index advanced by 1.8 percent to a six-month closing high.

Gold stocks also turned in a strong performance, moving higher along with the price of gold. With gold for August delivery climbing $4.30 to $1,330.90 an ounce, the NYSE Arca Gold Bugs Index rose by 1.3 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index surged up by 1.6 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index fell by 0.4 percent, the German DAX Index and the U.K.'s FTSE 100 Index edged up by 0.1 percent and 0.2 percent, respectively.

In the bond market, treasuries moved sharply lower on the heels of the upbeat jobs data, extending yesterday's pullback. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 6.5 basis points to 2.628 percent.

Looking Ahead

While the monthly jobs report is likely to be in focus on Thursday, several other economic reports are also scheduled to be released, including reports on weekly jobless claims, international trade, and service sector activity.