Stocks End First Trading Day Of 2015 Roughly Flat - U.S. Commentary

(RTTNews) - Following the New Year's Day holiday on Thursday, stocks fluctuated over the course of the trading day on Friday before ending the session roughly flat. The lackluster performance came on the heels of the sharp pullback that was seen on Wednesday.

The major averages eventually ended the day on opposite sides of the unchanged line. The Dow inched up 9.92 points or 0.1 percent to 17,832.99, while the Nasdaq dipped 9.24 points or 0.2 percent to 4,726.81 and the S&P 500 edged down 0.70 points or less than a tenth of a percent to 2,058.20.

For the week, the major averages all moved to the downside. The Dow tumbled by 1.2 percent, while the Nasdaq and the S&P 500 dropped by 1.7 percent and 1.5 percent, respectively.

The choppy trading on Wall Street came as many traders remained on the sidelines following the holiday, leading to light trading activity.

Traders were also digesting some disappointing economic data, including a report from the Institute for Supply Management showing a significant slowdown in the pace of growth in the manufacturing sector in the month of December.

The ISM said its purchasing managers index fell to 55.5 in December from 58.7 in November, although a reading above 50 indicates continued growth in the manufacturing sector.

Economists had expected the index to drop to 57.5. With the bigger than expected decrease, the index fell to its lowest level since hitting 55.3 in June.

A separate report from the Commerce Department showed an unexpected drop in construction spending in November.

The disappointing data largely overshadowed comments from European Central Bank president Mario Draghi adding to speculation that the bank will provide further stimulus.

In an interview with German financial daily Handelsblatt, Draghi said that the risk of deflation in the euro area has risen and said the ECB is preparing to react to such a threat.

Draghi's comments suggested that the ECB is moving closer to unleashing full-blown quantitative easing, including sovereign bond purchases.

Sector News

While most of the major sectors ended the day show only modest moves, considerable strength was visible among gold stocks. Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index surged up by 2.3 percent.

The gains by gold stocks came amid a modest increase by the price of the precious metal, with gold for February delivery climbing $2.10 to $1,186.20 an ounce.

Commercial real estate stocks also turned in a strong performance on the day, driving the Morgan Stanley REIT Index up by 1.5 percent. Metaldyne Performance Group (MPG) helped to lead the sector higher, jumping by 10.7 percent.

On the other hand, steel stocks showed a notable move to the downside, resulting in a 1.1 percent drop by the NYSE Arca Steel Index. The weakness in the sector partly reflected the disappointing manufacturing data.

Tobacco, airline, and trucking stocks also saw some weakness but finished the session well off their worst levels of the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, although several markets remained closed on the day. Hong Kong's Hang Seng Index surged up by 1.1 percent, while Australia's All Ordinaries Index climbed by 0.5 percent.

Meanwhile, the major European markets ended the day in the red. While the U.K.'s FTSE 100 Index fell by 0.3 percent, the German DAX Index and the French CAC 40 Index dropped by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries moved notably higher on the heels of the disappointing U.S. economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 4.7 basis points to 2.123 percent.

Looking Ahead

Following two holiday-interrupted weeks, trading is expected to return to normal next week, with the spotlight likely to be on the monthly jobs report.

Ahead of the release of the jobs report next Friday, trading could be impacted by reports on service sector activity, private sector employment and international trade.

The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which could shed some light on the outlook for monetary policy.