Stocks Experience Choppy Trading Following Recent Strength - U.S. Commentary

(RTTNews) - Stocks are turning in a lackluster performance in early trading on Friday after trending higher over the past several sessions. Following the rally seen on Thursday, the major averages are showing only modest moves on the day.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 2.25 points or 0.1 percent at 4,752.65, the Dow is down 38.69 points or 0.2 percent at 17,775.29 and the S&P 500 is down 3.90 points or 0.2 percent at 2,059.25.

The choppy trading on Wall Street is partly due to uncertainty about the near-term outlook for the markets following the volatility seen thus far in the New Year.

Buying interest has recently been generated by optimism about additional stimulus from the European Central Bank, although questions remain about the effectiveness of the bank's expanded asset purchase program.

On Thursday, ECB President Mario Draghi said the bank will purchase 60 billion euros per month worth of securities, including investment grade sovereign bonds, beginning in March.

The expanded asset purchase program is currently scheduled to last until September of 2016, although Draghi said purchases would continue until there is a sustained improvement in inflation. However, Peter Boockvar, managing director at the Lindsey Group, noted that commodities did not participate in the rally on Thursday despite being the implicit target of ECB quantitative easing.

"Higher commodity prices, which will happen, will certainly solve Draghi's 'price stability' problems," Boockvar said. "Then we'll definitely test the central bank thesis that higher inflation leads to growth rather than being a consequence of it."

Traders are also digesting the latest U.S. economic data, including a report from the National Association of Realtors showing that existing home sales rebounded roughly in line with estimates in December.

NAR said existing home sales rose 2.4 percent to a seasonally adjusted annual rate of 5.04 million in December after tumbling 6.3 percent to a downwardly revised 4.92 million in November.

Economists had expected existing home sales to climb to an annual rate of 5.05 million from the 4.93 million originally reported for the previous month.

A separate report from the Conference Board showed that its index of leading U.S. economic indicators rose by slightly more than expected in December.

Many of the major sectors are showing only modest moves, although substantial weakness has emerged among steel stocks. Reflecting the weakness in the sector, the NYSE Arca Steel Index has tumbled by 3.5 percent.

Gold stocks have also come under pressure in early trading, dragging the NYSE Arca Gold Bugs Index down by 2.9 percent. The losses by gold stocks come as gold for February delivery is sliding $13.10 to $1,287.60 an ounce.

Transportation and chemical stocks are also seeing early weakness, while notable strength is visible among networking and natural gas stocks.

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Friday. Japan's Nikkei 225 Index advanced by 1.1 percent, while Hong Kong's Hang Seng Index shot up by 1.3 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has edged up by 0.2 percent, the French CAC 40 Index and the German DAX Index are jumping by 1.5 percent and 1.7 percent, respectively.

In the bond market, treasuries are moving sharply higher, offsetting the weakness seen in the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 8.3 basis points at 1.813 percent.