Stocks Close Roughly Flat Following Choppy Trading Day - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout much of the trading session on Wednesday after failing to sustain an initial upward move. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the session roughly flat. While the Nasdaq inched up 5.50 points or 0.1 percent to 4,981.69, the Dow edged down 7.74 points or less than 0.1 percent to 18,060.49 and the S&P 500 slipped 0.64 points or less than 0.1 percent to 2,098.48.

The choppy trading on Wall Street came as traders kept a close eye on the bond market following the release of disappointing retail sales data.

Before the start of trading, the Commerce Department released a report showing that retail sales were virtually unchanged in April compared to economist estimates for a 0.2 percent increase.

Excluding a drop in auto sales, retail sales inched up by 0.1 percent in April, although that was still well short of the 0.5 percent increase expected by economists.

James Knightley, an economist at ING Bank, said, "We still aren't really seeing the big recovery that was anticipated in the wake of the weather depressed first quarter."

"This just really reinforces the view that a June hike isn't happening and that September looks the more probable start point," he added.

Treasuries initially responded positively to the retail sales data, pushing yields lower for the second consecutive session.

However, buying interest eventually faded and bond prices subsequently pulled back off their early highs and into negative territory.

Among individual stocks, shares of Ralph Lauren (RL) came under pressure on the day even though the upscale clothing company reported better than expected fiscal fourth quarter results.

Department store operator Macy's (M) also moved to the downside after reporting first quarter results that came in below analyst estimates.

Meanwhile, shares of Owens-Illinois (OI) moved sharply higher after the beer and wine bottle maker agreed to acquire the food and beverage glass container business of Mexico's Vitro for $2.15 billion.

Sector News

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

Railroad stocks showed a substantial move to the downside, however, with the Dow Jones Railroads Index tumbling by 2.6 percent. With the drop, the index fell to its lowest closing level in seven months.

The weakness among railroad stocks came on the heels of news of an Amtrak train derailment in Philadelphia that killed at least seven people.

Significant weakness was also visible among natural gas stocks, as reflected by the 1.1 percent loss posted by the NYSE Arca Natural Gas Index. The weakness in the sector came despite an increase by the price of natural gas.

Commercial real estate and utilities stocks also came under pressure on the day, while gold stocks moved sharply higher along with the price of the precious metal.

With gold for June delivery jumping $25.80 to $1,218.20 an ounce, the NYSE Arca Gold Bugs Index surged up by 2.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, although the Hong Kong and Chinese markets bucked the uptrend. Japan's Nikkei 225 Index and Australia's All Ordinaries Index both advanced by 0.7 percent.

Meanwhile, the major European markets ended the day mixed. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index fell by 0.3 percent and the German DAX Index slumped by 1.1 percent.

As mentioned above, treasuries turned lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.2 basis points to 2.282 percent after hitting a low of 2.189 percent.

Looking Ahead

In light of the recent focus on the bond market, trading on Thursday could be impacted by reaction to the Treasury Department's auction of $16 billion worth of thirty-year bonds.

Traders are also likely to keep a close eye on the release of reports on weekly jobless claims and producer price inflation.

On the earnings front, Cisco Systems (CSCO), J.C. Penney (JCP), and Shake Shack (SHAK) are releasing their quarterly results after the close of today's trading.