Stocks Turning In Yet Another Lackluster Performance - U.S. Commentary

(RTTNews) - Stocks have shown a lack of direction over the course of the trading day on Friday, extending the lackluster performance seen over the past few sessions. The choppy trading comes despite the release of upbeat employment data.

Currently, the major averages are turning in a mixed performance. While the Dow is down 7.80 points or 0.1 percent at 16,551.07, the Nasdaq is up 8.74 points or 0.2 percent at 4,136.20 and the S&P 500 is up 1.56 points or 0.1 percent at 1,885.24.

Before the start of trading, the Labor Department released a report showing stronger than expected job growth and a steep drop in the unemployment rate.

The Labor Department said non-farm payroll employment surged up by 288,000 jobs in April compared to economist estimates for an increase of about 218,000 jobs.

Additionally, the report showed upward revisions to the job growth in the two previous months. Revised data showed that employment rose by 203,000 jobs in March and 222,000 jobs in February, reflecting a net upward revision of 36,000.

With the stronger than expected job growth, the unemployment rate dropped to 6.3 percent in April from 6.7 percent in March. Economists had expected the unemployment rate to edge down to 6.6 percent.

The drop pulled the unemployment rate down to its lowest level since September of 2008, although the decrease partly reflected a notably smaller labor force.

While the job growth generated some positive sentiment regarding the economy, the drop by the unemployment rate led to renewed worries about the outlook for interest rates.

The Federal Reserve recently dropped language suggesting that it would consider raising interest rates when the unemployment rate dropped below 6.5 percent, but the data still reinforces the notion that easy monetary policy will not last forever.

Concerns about the ongoing crisis in Ukraine are also weighing on the markets amid news of clashes between Ukrainian armed forces and pro-Russian militants.

Amid the worries about an escalation of the conflict over the weekend, traders seem reluctant to push the Dow and the S&P 500 to new record highs.

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 1.6 percent but remains stuck in a recent trading range.

The strength in the gold sector comes amid a notable increase by the price of the precious metal, with gold for June delivery climbing $18.80 to $1,302.20 an ounce.

Housing stocks are also holding on to strong gains in mid-day trading, resulting in a 1.6 percent advance by the Philadelphia Housing Sector Index. MDC Holdings (MDC) and D.R. Horton (DHI) are turning in two of the sector's best performances.

Meanwhile, biotechnology stocks have come under significant selling pressure on the day, dragging the NYSE Arca Biotechnology Index down by 1.5 percent. Pharmacyclics (PCYC) is leading the sector lower after reporting its quarterly results.

Notable weakness is also visible among utilities stocks, as reflected by the 1.4 percent loss being posted by the Dow Jones Utilities Average. With the drop, the average is giving back ground after ending the previous session at a record closing high.

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 dipped by 0.2 percent, while Hong Kong's Hang Seng Index advanced by 0.6 percent.

The major European markets also ended the day on opposite sides of the unchanged line. While the U.K.'s FTSE 100 Index crept up 0.2 percent, the French CAC 40 Index and the German DAX Index fell by 0.7 percent and 0.5 percent, respectively.

In the bond market, treasuries have shown a notable rebound after coming under pressure earlier in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.602 percent.