Stocks Fluctuate But Remain Mostly Negative - U.S. Commentary

(RTTNews) - While disappointing jobs data has generated some negative sentiment on Wall Street on Friday, selling pressure has remained somewhat subdued. The major averages have fluctuated as the day has progressed but largely remained in the red.

Currently, the major averages are all in negative territory, although the Dow is down just 20.30 points or 0.1 percent at 17,640.41. The Nasdaq is down 26.20 points or 0.6 percent at 4,690.90, and the S&P 500 is down 6.32 points or 0.3 percent at 2,044.31.

The weakness currently visible on Wall Street comes following the release of a report from the Labor Department showing much weaker than expected job growth in April.

The report said non-farm payroll employment rose by 160,000 jobs in April compared to economist estimates for a jump of about 200,000 jobs.

Revised data also showed that employment in February and March increased by 233,000 jobs and 208,000 jobs, respectively, reflecting a net downward revision of 19,000 jobs.

The Labor Department also said the unemployment rate held at 5.0 percent in April, unchanged from the previous month. The rate had been expected to edge down to 4.9 percent.

Meanwhile, the report also showed that average hourly employee earnings rose by $0.08 or 0.3 percent to $25.53 in April.

The annual rate of growth in average hourly earnings subsequently accelerated to 2.5 percent in April from 2.3 percent in March.

The weaker than expected job growth has added to concerns about the strength of the economy, although the data has also led to speculation the Federal Reserve will further delay raising interest rates.

Chris Low, chief economist at FTN Financial, said, "Given Yellen's cautious nature, wait and see is likely what the FOMC will do in June if the May report is weak, but there's a whole month to get through before we find out."

"For the time being, consider the odds of a June hike reduced, but only marginally. Not that they were ever all that high to begin with," he added.

The Fed has left interest rates unchanged at its last three meetings after raising rates for the first time in nearly a decade last December.

Sector News

Airline stocks continue to see substantial weakness in mid-day trading, with the NYSE Arca Airline Index down by 2.9 percent. With the loss, the index has fallen to a two-month low.

Copa Airlines parent Copa Holdings (CPA) is posting a particularly steep loss despite reporting better than expected first quarter results.

Significant weakness is also visible among drug stocks, as reflected by the 1.7 percent loss being posted by the NYSE Arca Pharmaceutical Index. The drop has pulled the index down to its lowest level in a month.

Endo International (ENDP) has led the sector lower after the drug maker reported better than expected first quarter earnings but cut its full-year guidance.

Utilities, telecom, and biotechnology stocks have also come under pressure on the day, contributing to the weakness being show by the broader markets.

On the other hand, gold stocks have moved sharply higher along with the price of previous metal, driving the NYSE Arca Gold Bugs Index up by 5.3 percent. Gold for June delivery is jumping $22.30 to $1,294.60 an ounce.

Notable strength among energy stocks has also helped to limit the downside for the markets, with the strength in the sector coming as crude for June delivery is climbing $0.85 to $45.17 a barrel.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index fell by 0.3 percent, while Hong Kong's Hang Seng Index slumped by 1.7 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index dropped by 0.4 percent, the U.K.'s FTSE 100 Index and the German DAX Index both edged up by 0.2 percent.

In the bond market, treasuries are lingering near the unchanged line after pulling back off their early highs. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.754 percent.