Stocks Still Experiencing Choppy Trading After BoE Decision - U.S. Commentary

(RTTNews) - After showing a lack of direction earlier in the session, stocks continue to turn in a lackluster performance in mid-day trading on Thursday. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are all posting modest gains on the day. The Dow is up 6.50 points or less than a tenth of a percent at 18,361.50, the Nasdaq is up 11.28 points or 0.2 percent at 5,171.01 and the S&P 500 is up 3.11 points or 0.1 percent at 2,166.90.

The choppy trading on Wall Street comes following the Bank of England's announcement of its decision to reduce interest rates following Britain's vote to leave the European Union.

The BoE revealed that its Monetary Policy Committee voted unanimously to lower interest rates by 25 basis points to a record low 0.25 percent, marking the first rate cut in over seven years.

Noting that the exchange rate has fallen and the outlook for growth in the short to medium term has weakened markedly, the central bank also indicated that it could lower rates further.

The bank also introduced a package of measures designed to provide additional monetary stimulus, including a scheme to reinforce the pass-through of the rate cut.

In his subsequent press conference, BoE Governor Mark Carney said banks have "no excuse" not to pass on lower borrowing costs to customers.

Additionally, the BoE said it would purchase up to 10 billion pounds worth of corporate bonds and 60 billion pounds worth of U.K. government bonds.

The central bank also slashed its forecast for U.K. economic growth, saying it now expects the economy to grow by 0.8 just percent in 2017 compared to its previous forecast for 2.3 percent growth.

With the BoE decision now in the rear-view mirror, traders may be looking ahead to the Labor Department's monthly jobs report due to be released on Friday.

The report is expected to show an increase of about 185,000 jobs in July after employment jumped by 287,000 jobs in June. The unemployment rate is expected to edge down to 4.8 percent from 4.9 percent.

The Labor Department released a report before the start of trading showing an unexpected uptick in initial jobless claims in the week ended July 30th.

The report said initial jobless claims rose to 269,000, an increase of 3,000 from the previous week's unrevised level of 266,000. Economists had expected claims to edge down to 265,000.

A separate report from the Commerce Department showed that factory orders slumped by 1.5 percent in June compared to economist estimates for a 1.8 percent drop.

Sector News

While most of the major sectors are showing only modest moves, considerable strength has emerged among gold stocks. The NYSE Arca Gold Bugs Index has surged up by 1.8 percent, matching the three-year intraday high set on Tuesday.

The strength in the gold sector comes amid an increase by the price of the precious metal, with gold for December delivery climbing $5.10 to $1,369.80 an ounce.

Airline stocks have also moved notably higher on the day, driving the NYSE Arca Airline Index up by 1.8 percent. Copa Airlines parent Copa Holdings (CPA) is posting a standout gain after reporting better than expected second quarter earnings.

Natural gas and semiconductor stocks are also seeing some strength in mid-day trading, while weakness is visible in the biotechnology sector.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Thursday. Japan's Nikkei 225 Index surged up by 1.1 percent, while Hong Kong's Hang Seng Index climbed by 0.4 percent.

The major European markets = also moved higher on the day. While the U.K.'s FTSE 100 Index jumped by 1.6 percent, the French CAC 40 Index and the German DAX Index both advanced by 0.6 percent.

In the bond market, treasuries have pulled back off their highs for the session but remain firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.1 basis points at 1.501 percent.