Stocks Finish Choppy Trading Session Nearly Flat - U.S. Commentary

(RTTNews) - After moving sharply higher over the course of the two previous sessions, stocks showed a lack of direction throughout the trading day on Thursday. Despite the lackluster performance, the tech-heavy Nasdaq crept up to its best closing level in over a month.

The major averages eventually ended the trading day on opposite sides of the unchanged line. While the Nasdaq inched up 6.88 points or 0.1 percent to 4,901.77, the Dow slipped 23.22 points or 0.1 percent to 17,828.29 and the S&P 500 edged down 0.44 points or less than a tenth of a percent to 2,090.10.

The choppy trading on Wall Street came as traders digested the latest batch of U.S. economic data, which added to recent uncertainty about the outlook for interest rates.

The National Association of Realtors released a report this morning showing that pending home sales surged up to their highest level in a decade in April.

NAR said its pending home sales index jumped by 5.1 percent to 116.3 in April after climbing by 1.6 percent to an upwardly revised 110.7 in March. Economists had expected the index to increase by just 0.8 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the much bigger than expected increase, the pending home sales index reached its highest level since hitting 117.4 in February of 2006.

The Labor Department also released a report showing a bigger than expected drop in initial jobless claims in the week ended May 21st.

The report said initial jobless claims fell to 268,000, a decrease of 10,000 from the previous week's unrevised level of 278,000. Economists had expected claims to edge down to 275,000.

A separate report from the Commerce Department showed a sharp jump in durable goods orders in April, although the data also pointed to continued weakness in business spending.

While the report said durable goods orders shot up by 3.4 percent in April, orders for non-defense capital goods excluding aircraft, a closely watched indicator of capital spending, fell by 0.8 percent.

Sector News

Most of the major sectors ended the day showing only modest moves, although considerable weakness was visible among oil service stocks. Reflecting the weakness in the sector, the Philadelphia Oil Service Index fell by 1.8 percent.

The pullback by oil service stocks came as crude oil for July delivery edged down $0.08 to $49.48 a barrel after climbing above $50 a barrel for the first time since October.

Airline stocks also came under pressure on the day, dragging the NYSE Arca Airline Index down by 1.6 percent. With the drop, the index fell to its lowest closing level in three months.

Biotechnology and chemical stocks also moved to the downside, while notable strength was visible among utilities and steel stocks.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region saw modest strength on Thursday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both inched up by 0.1 percent, while China's Shanghai Composite Index edged up by 0.3 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index closed just above the unchanged line, the French CAC 40 Index and the German DAX Index both advanced by 0.7 percent.

In the bond market, treasuries moved back to the upside after closing modestly lower in the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.7 basis points to 1.823 percent.

Looking Ahead

Reports on first quarter GDP and consumer sentiment may attract attention on Friday along with a speech by Federal Reserve Chair Janet Yellen.