Stocks Fluctuate Before Closing Roughly Flat - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks moved mostly higher over the course of morning trading on Friday before pulling back going into the close of the abbreviated session.

The major averages eventually ended the day on opposite sides of the unchanged line. While the S&P 500 dipped 5.27 points or 0.3 percent to 2,067.56, the Dow inched up 0.49 points or less than a tenth of a percent to 17,828.24 and the Nasdaq edged up 4.31 points or 0.1 percent to 4,791.63.

For the week, the Nasdaq surged up by 1.7 percent, while the Dow and the S&P 500 crept up by 0.1 percent and 0.2 percent, respectively. The fluctuations shown by stocks as the day progressed came amid light trading activity, with many traders staying away from their desks following the Thanksgiving Day holiday on Thursday.

A lack of major U.S. economic data as well as shortened trading session on Wall Street also likely contributed to the volatility.

Additionally, traders were digesting a sharp drop by the price of crude oil, with crude for January delivery plunging $7.38 to $66.31 a barrel.

The steep decline by the price of oil came amid news that the powerful Organization of Petroleum Exporting Countries said it won't cut production levels despite the recent drop in prices.

Saudi Arabian oil minister Ali Al-Naimi said OPEC would maintain its oil production target at 30 million barrels per day.

"With another sharp drop in oil prices, consumers and transportation companies rejoice and the BoJ, ECB, BoE and Fed stew that their inflation targets are now more difficult to achieve," said Peter Boockvar, managing director at the Lindsey Group.

At the same time, Boockvar noted, "The U.S. oil and gas industry, one of the fastest growing and vibrant areas of the U.S. economy over the past 5 years, is potentially on the cusp of a major slowdown."

Sector News

Despite the lackluster close by the broader markets, many of the major sectors showed significant moves on the day.

Energy stocks saw substantial weakness amid the steep drop by the price of crude oil, with the Philadelphia Oil Service Index and the NYSE Arca Oil & Gas Index plunging by 8.5 percent and 7.3 percent, respectively.

Considerable weakness also emerged among gold stocks, as reflected by the 8.1 percent loss posted by the NYSE Arca Gold Bugs Index. The sell-off came as gold for February delivery tumbled $22 to $1,175.50 an ounce.

Railroad, steel, and chemical stocks also saw notable weakness, although the extent of the downward moves may have been accentuated by the below average volume.

On the other hand, airline stocks moved sharply on the day amid optimism about the impact of lower fuel prices. The NYSE Arca Airline Index surged up by 3.9 percent, reaching its best closing level in over twelve years.

Retail, trucking, and utilities stocks also saw significant strength, offsetting the weakness seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index surged up by 1.2 percent, while Australia's All Ordinaries Index tumbled by 1.6 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the German DAX Index and the French CAC 40 Index inched up by 0.1 percent and 0.2 percent, respectively.

In the bond market, treasuries moved notably higher, extending a recent upward move. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.194 percent.

Looking Ahead

U.S. economic data may be in focus next week, with traders likely to keep a close eye on the release of the monthly employment reports next Friday.

Ahead of the release of the jobs report, trading could be impacted by data on manufacturing and service sector activity, construction spending, and labor productivity.

On the earnings front, retailers Abercrombie & Fitch (ANF), Aeropostale (ARO), Barnes & Noble (BKS), and Dollar General (DG) are among the companies due to report their quarterly results next week.