U.S. Stocks Give Back Ground After Early Move To The Upside

(RTTNews) - Stocks showed a strong move to the upside in early trading on Friday but have given back ground over the course of the trading session. The major averages have pulled back well off their best levels of the day, with the Dow and the S&P 500 sliding into negative territory.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 67.96 points or 0.3 percent at 23,649.11, the S&P 500 is down 2.24 points or less than a tenth of a percent at 6,820.10 and the Dow is down 139.48 points or 0.3 percent at 47,382.64.

The early strength on Wall Street largely reflected a positive reaction to earnings news from Amazon (AMZN), with the online retail giant soaring by 10.4 percent.

Amazon rallied to a new record intraday high after reporting better than expected third quarter results amid a sharp increase in cloud computing revenue.

"The e-commerce division may have by far the bigger public profile but it's the cloud services AWS division which is the real engine of Amazon's growth and, it's this which sparked the share price into life," said AJ Bell investment director Russ Mould.

He added, "Demand for computing power linked to AI is showing no signs of letting up and that is driving significant growth for AWS, with third-quarter numbers helping to ease fears that this business was losing ground to rival operators."

Netflix (NFLX) also continues to turn in a strong performance on the day after the streaming giant announced its board of directors has approved a ten-for-one stock split.

On the other hand, iPhone maker Apple (AAPL) has moved to the downside despite reporting fiscal fourth quarter results that exceeded analyst estimates and providing upbeat guidance for the current quarter.

The pullback by the broader markets may also reflect renewed uncertainty about the outlook for interest rates following Federal Reserve Jerome Powell's remarks earlier this week.

While the Fed lowered interest rates by another quarter point as widely expected on Wednesday, Powell's post-meeting remarks partly offset optimism about another rate cut in December.

Powell said a further reduction in rates in December is "not a foregone conclusion," noting Fed officials had "strongly differing views about how to proceed" at the final meeting of the year.

Following Powell's comments, CME Group's FedWatch Tool indicates the chances the Fed cuts rates by another quarter point in December have tumbled to 63.0 percent from 91.7 percent a week ago.

Sector News

Despite the pullback by the broader markets, retail stocks continue to turn in a strong performance amid the surge by Amazon. The Dow Jones U.S. Retail Index has pulled back off its best levels but remains up by 4.1 percent.

Significant strength also remains visible among airline stocks, as reflected by the 1.7 percent gain being posted by the NYSE Arca Airline Index. The index is bouncing off its lowest closing level in well over two months.

Biotechnology stocks also continue to see notable strength, while gold stocks have come under pressure amid a decrease by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 2.0 percent.

Interest rate-sensitive utilities stocks have also moved to the downside on the day, with the Dow Jones Utility Average falling by 1.2 percent to its lowest intraday level in a month.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index surged by 2.1 percent, while China's Shanghai Composite Index slid by 0.8 percent and Hong Kong's Hang Seng Index tumbled by 1.4 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index declined by 0.7 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both fell by 0.4 percent.

In the bond market, treasuries have shown a lack of direction over the course of the session. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 4.097 percent.