U.S. Stocks Close Mixed On The Day But Higher For The Week

(RTTNews) - Following the strong upward move seen over the two previous sessions, stocks showed a lack of direction during trading on Friday. The major averages spent much of the day bouncing back and forth across the unchanged line before closing mixed.

While the tech-heavy Nasdaq dipped 13.75 points or 0.2 percent to 8,103.07, the Dow and the S&P 500 reached their best closing levels in over a month. The Dow rose 69.31 points or 0.3 percent to 26,797.46 and the S&P 500 inched up 2.71 points or 0.1 percent to 2,978.71.

Despite the mixed performance on the day, the major averages all moved notably higher for the holiday-shortened week. The Dow jumped by 1.5 percent, while the Nasdaq and the S&P 500 both surged up by 1.8 percent.

The choppy trading on Wall Street came following the release of a closely watched report from the Labor Department showing weaker than expected job growth in the month of August.

The report said non-farm payroll employment rose by 130,000 jobs in August after climbing by a downwardly revised 159,000 jobs in July.

Economists had expected employment to increase by about 158,000 jobs compared to the addition of 164,000 jobs originally reported for the previous month.

The weaker than expected job growth came as notable increases in employment in healthcare and financial activities were partly offset by the loss of mining and retail jobs.

The report said government employment climbed by 34,000 jobs, largely reflecting the hiring of temporary workers for the 2020 Census.

Meanwhile, the Labor Department said the unemployment rate held at 3.7 percent in August, unchanged from July and in line with economist estimates.

The report also said average hourly employee earnings climbed by $0.11 to $28.11 in August following 9-cent gains in both June and July.

"Payrolls growth is slowing but wages are picking up, which underlines the difficult decision facing the Federal Reserve," said ING Chief International Economist James Knightley.

He added, "The risks from a deteriorating international backdrop and a manufacturing recession mean we still look for September and December rate cuts."

Meanwhile, traders largely shrugged off comments from Federal Reserve Chairman Jerome Powell, who argued the central has helped keep the economy on solid ground amid the uncertainty caused by President Donald Trump's trade war with China.

"The Fed has through the course of the year seen fit to lower the expected path of interest rates," Powell said during a forum in Zurich, Switzerland. "That has supported the economy. That is one of the reasons why the outlook is still a favorable one."

Powell argued that the uncertainty caused by the escalating trade dispute between the U.S. and China has caused some companies to hold back on investment

"We've been hearing quite a bit about uncertainty," Powell said. "So for businesses, to particularly make longer-term investments in plants or equipment or software, they want some certainty that the demand will be there."

Despite the uncertainty cause by the trade war, Powell noted the Fed does not currently anticipate a recession, noting the labor market and consumer spending remain strong.

"We're not forecasting or expecting a recession," the Fed chief said. "The most likely outlook is still moderate growth, a strong labor market and inflation continuing to move back up."

Powell also reiterated his oft-repeated pledge that the Fed will "act as appropriate" to sustain the U.S. economic expansion.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Gold stocks showed a substantial move to the downside, however, with the NYSE Arca Gold Bugs Index plunging by 3.2 percent.

The sell-off by gold stocks came as the price of the precious metal turned lower after seeing initial strength. After reaching a high of $1,536.20 an ounce, gold for December delivery slumped $10 to $1,515.50 an ounce.

Natural gas stocks climbed off their worst levels but also saw notable weakness on the day, while some strength was visible among tobacco stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index, China's Shanghai Composite Index, and Australia's S&P/ASX 200 Index also rose by 0.5 percent.

The major European markets also moved to the upside on the day. While the German DAX Index climbed by 0.5 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both edged up by 0.2 percent.

In the bond market, treasuries moved modestly higher after coming under pressure early in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.5 basis points to 1.550 percent.

Looking Ahead

Next week's trading may be impacted by reaction to reports on producer and consumer price inflation, retail sales, and consumer sentiment.