Stocks Fluctuate After Seeing Initial Weakness - U.S. Commentary

(RTTNews) - After initially moving to the downside, stocks have fluctuated over the course of the trading session on Friday. The major averages have climbed well off their early lows, with the Nasdaq and the S&P 500 briefly peeking above the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 39.07 points or 0.2 percent at 18,574.45, the Nasdaq is down 3.53 points or 0.1 percent at 5,224.87 and the S&P 500 is down 1.85 points or 0.1 percent at 2,183.94.

The initial weakness on Wall Street was partly due to profit taking after the major averages reached new record closing highs in the previous session.

Negative sentiment was also generated by a report from the Commerce Department showing that U.S. retail sales were unexpectedly flat in the month of July.

The Commerce Department said retail sales were virtually unchanged in July after climbing by an upwardly revised 0.8 percent in June.

Economists had expected sales to rise by 0.4 percent compared to the 0.6 percent increase originally reported for the previous month.

Excluding a jump in auto sales, retail sales fell by 0.3 percent in July after advancing by an upwardly revised 0.9 percent in June. Ex-auto sales had been expected to rise by 0.2 percent.

Sophia Kearney-Lederman, an economic analyst at FTN Financial, said, "Strong auto sales buoyed the headline number but appear to have come at the expense of spending on other consumer goods and services."

"While a slight pullback in sales was expected given the surge in June, the July retail sales report suggests some hesitation by consumers heading into the second half of the year," she added.

A separate report from the University of Michigan showed that consumer sentiment has improved by less than expected in the month of August.

Selling pressure waned not long after the open, however, with traders seemingly concerned about missing out on further upside for the markets.

Sector News

Most of the major sectors are showing only modest moves in mid-day trading, contributing to the lackluster performance being turned in by the broader markets.

Steel stocks continue to see considerable weakness, however, with the NYSE Arca Steel Index slumping by 2.2 percent. The index is pulling back further off the more than one-year closing high set last Friday.

Ryerson Holding (RYI), U.S. Steel (X) and AK Steel (AKS) are turning in some of the steel sector's worst performances on the day.

On the other hand, gold stocks have shown a strong move to the upside, driving the NYSE Arca Gold Bugs Index up by 1 percent.

The strength among gold stocks comes amid an increase by the price of the precious metal, with gold for December delivery climbing $7.90 to $1,357.90 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday on the heels of the overnight strength on Wall Street. Japan's Nikkei 225 Index surged up by 1.1 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

Meanwhile, the major European markets finished the day on opposite sides of the unchanged line. While the U.K.'s FTSE 100 Index closed slightly higher, the French CAC 40 Index edged down by 0.1 percent and the German DAX Index dipped by 0.3 percent.

In the bond market, treasuries have shown a notable rebound following the weakness seen on Thursday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 8 basis points at 1.492 percent.