Stocks Showing A Lack Of Direction On Mixed Earnings News - U.S. Commentary

(RTTNews) - After moving mostly lower over the course of the two previous sessions, stocks are turning in a lackluster performance in early trading on Thursday. The major averages are showing only modest moves, holding close to the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Dow is down 16.74 points or 0.1 percent at 17,834.30, the Nasdaq is up 19.19 points or 0.4 percent at 5,190.96 and the S&P 500 is up 1.18 points or 0.1 percent at 2,115.33.

The choppy trading on Wall Street partly reflects a mixed reaction to the latest earnings news as the reporting season gets into full swing.

Shares of General Motors (GM) are moving sharply higher after the auto giant reported better than expected second quarter earnings. The company also said its second half will be even better than the first.

United Continental (UAL) is also turning in a strong performance after reporting second quarter results that matched estimates and announcing an additional $3 billion share repurchase program.

On the other hand, shares of American Express (AXP) have come under pressure after the credit card giant reported second quarter earnings that exceeded estimates but on revenues that came in below forecasts.

Diversified manufacturing 3M (MMM) has also moved lower after reporting better than expected second quarter earnings but lowering the high end of its full-year guidance.

In economic news, the Labor Department released a report before the start of trading showing first-time claims for U.S. unemployment benefits tumbled to their lowest level in over forty years in the week ended July 18th.

The report said initial jobless claims dropped to 255,000, a decrease of 26,000 from the previous week's unrevised level of 281,000. Economists had expected jobless claims to edge down to 279,000.

With the much bigger than expected decrease, jobless claims fell to their lowest level since hitting 233,000 in November of 1973.

Separately, the Conference Board said its index of leading U.S. economic indicators rose more than expected in June, pointing to continued strength in the economic outlook for the remainder of the year.

Despite the lack of direction being shown by the broader markets, substantial strength has emerged among oil service stocks. The Philadelphia Oil Service Index has surged up by 2.6 percent, bouncing off its worst closing level in almost five years.

The rebound by oil service stocks comes amid a modest increase by the price of crude oil, with crude for September delivery climbing $0.14 to $49.33 a barrel.

Semiconductor, computer hardware, and networking stocks are also seeing significant strength, helping to push the tech-heavy Nasdaq higher.

Meanwhile, railroad stocks are seeing considerable weakness, as reflected by the 2.9 percent drop by the Dow Jones Railroads Index. Union Pacific (UNP) is leading the sector lower after reporting weaker than expected second quarter revenues.

Gold, telecom, and utilities stocks have also moved to the downside on the day, offsetting the strength seen in the aforementioned sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index rose by 0.4 percent, while Australia's All Ordinaries Index fell by 0.4 percent.

Meanwhile, the major European markets are roughly flat on the day. While the French CAC 40 Index has edged up by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both nearly unchanged.

In the bond market, treasuries are showing a lack of direction despite the upbeat economic data. 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 2.327 percent.