Stocks Continue To Show A Lack Of Direction In Mid-Day Trading - U.S. Commentary

(RTTNews) - After failing to sustain an initial upward move, stocks have shown a lack of direction over the course of the trading day on Wednesday. The major averages have spent the session bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest gains on the day. The Dow is up 10.55 points or 0.1 percent at 16,966.62, the Nasdaq is up 3.95 points or 0.1 percent at 4,462.60 and the S&P 500 is up 1.31 points or 0.1 percent at 1,974.63.

The initial strength on Wall Street came following the release of a report from payroll processor ADP showing that private sector employment in the U.S. 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.

Mark Zandi, chief economist of Moody's Analytics, said, "Judging from the job market, the economic recovery remains fully intact and is gaining momentum."

While the data generated some optimism about the Labor Department's monthly jobs report, traders seem reluctant to make any significant moves ahead of the release of the report on Thursday.

The Labor Department report includes both public and private sector jobs and is currently expected to show an increase of about 210,000 jobs.

A separate report from the Commerce Department showing a bigger than expected drop in factory orders may also have helped to offset the early buying interest.

Among individual stocks, shares of Vitacost.com (VITC) are moving 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.

Spirits producer Constellation Brands (STZ) has also moved to the upside after reporting better than expected first quarter results and raising its full-year guidance.

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

Sector News

While many of the major sectors are showing only modest moves, considerable strength is visible among gold stocks. Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index has advanced by 1.3 percent.

The strength among gold stocks comes amid a modest increase by the price of the precious metal, with gold for August delivery climbing $2.90 to $1,329.50 an ounce.

Steel stocks are also turning in a strong performance on the day, resulting in a 1.3 percent gain by the NYSE Arca Steel Index. With the gain, the index has reached its best intraday level in over five months.

On the other hand, airline stocks are seeing significant weakness, dragging the NYSE Arca Airline Index down by 2.1 percent. United Continental (UAL) and Delta (DAL) are posting steep losses.

Notable weakness has also emerged among utilities stocks, as reflected by the 1.3 percent loss being posted by the Dow Jones Utilities Average. The average is pulling back further off the record closing high it set on Monday.

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 are extending yesterday's pullback on the heels of the upbeat jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.5 basis points at 2.608 percent.