Stocks Climb Well Off Worst Levels But Remain In The Red - U.S. Commentary

(RTTNews) - Selling pressure has waned considerably from earlier in the session, but stocks remain in the red in mid-day trading on Friday. Disappointing economic data continues to weigh on the markets following the rebound seen in the previous session.

While the major averages have climbed well off their worst levels, they currently remain stuck in negative territory. The Dow is down 54.68 points or 0.3 percent at 17,783.88, the Nasdaq is down 34.97 points or 0.7 percent at 4,936.40 and the S&P 500 is down 10.11 points or 0.5 percent at 2,095.15.

The weakness on Wall Street comes as the Labor Department's highly anticipated monthly jobs report showed much weaker than expected job growth.

Before the start of trading, the Labor Department released a report showing employment edged up by just 38,000 jobs in May compared to economist estimates for an increase of about 158,000 jobs.

The much weaker than expected job growth in May reflected the smallest increase in employment since September of 2010.

The job gains in March and April were also downwardly revised to 186,000 and 123,000, respectively, reflecting a net downward revision of 59,000 jobs.

While the weak job growth partly reflected a recent strike by Verizon (VZ) workers, the data has still raised some concerns about the economy.

A separate report from the Institute for Supply Management showed that growth in service sector activity slowed by much more than expected in May.

The ISM said its non-manufacturing index fell by 2.8 points to 52.9 in May after climbing by 1.2 points to 55.7 in April.

While a reading above 50 continues to indicate growth in the service sector, economists had expected the index to show a more modest drop to 55.5.

Analysts have suggested the data eliminates the possibility the Federal Reserve will raise interest rates this month and could delay any rate hike until at least September.

Sector News

Financial stocks continue to see substantial weakness in mid-day trading amid concerns the disappointing economic data will keep interest rates near record low levels for the foreseeable future.

Reflecting the weakness in the financial sector, the Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index are down by 2.9 percent and 2.7 percent, respectively.

Significant weakness is also visible among biotechnology stocks, as reflected by the 1.6 percent drop by the NYSE Arca Biotechnology Index. The index is pulling back off yesterday's nearly five-month closing high.

Profit taking is also contributing to notable weakness among internet stocks, with the Dow Jones Internet Index falling 1.2 percent after ending the previous session at its best closing level of 2016.

On the other hand, gold stocks have moved sharply higher on the day, driving the NYSE Arca Gold Bugs Index up by 8.8 percent. The strength in the sector comes as gold for August delivery is jumping $29 to $1,241.60 an ounce.

Interest rate-sensitive utilities stocks are also turning in a strong performance, with the Dow Jones Utilities Average climbing 1.7 percent to a record intraday high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index and China's Shanghai Composite Index both advanced by 0.5 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.

Meanwhile, the major European markets ended the day mixed. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index and the German DAX Index both slumped by 1 percent.

In the bond market, treasuries have spiked higher on the heels of the disappointing economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, has tumbled by 9.8 basis points to 1.713 percent.