Major Averages Close Mixed Ahead Of Monthly Jobs Report - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction during trading on Thursday, extending the lackluster performance seen in the previous session. Despite the choppy trading, the Dow climbed to another new record closing high.

The major averages ended the day on opposite sides of the unchanged line. While the Dow inched up 9.86 points or less than a tenth of a percent to 22,026.10, the Nasdaq fell 22.30 points or 0.4 percent to 6,340.34 and the S&P 500 dipped 5.41 points or 0.2 percent to 2,472.16.

Traders seemed reluctant to make significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

The report is expected to show employment climbed by 183,000 jobs in July, while the unemployment rate is expected to dip to 4.3 percent.

A report released by the Labor Department this morning showed a modest decrease in first-time claims for unemployment benefits in the week ended July 29th.

The report said initial jobless claims dipped to 240,000, a decrease of 5,000 from the previous week's revised level of 245,000. Economists had expected jobless claims to edge down to 242,000.

The Institute for Supply Management released a separate report showing a notable slowdown in the pace of service sector growth in the month of July.

The ISM said its non-manufacturing index dropped to 53.9 in July from 57.4 in June, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to dip to 57.0.

Meanwhile, the Commerce Department released a report showing a substantial increase in factory orders in the month of June.

Overseas, the Bank of England kept its record low interest rate unchanged in a split vote, as expected, and maintained the size of monetary stimulus.

The Monetary Policy Committee, headed by Governor Mark Carney, voted 6 to 2 to keep the interest rate at an historic low of 0.25 percent.

The bank downgraded its economic growth projections for 2017 to 1.7 percent from 1.9 percent and for 2018 to 1.6 percent from 1.7 percent. The outlook for 2019 was maintained at 1.8 percent.

Sector News

Most of the major sectors showed only modest moves on the day, contributing to the lackluster performance by the broader markets.

Telecom stocks saw substantial weakness, however, with the NYSE Arca North American Telecom Index plunging by 3.5 percent. The index pulled back off its best closing level in nearly two months.

Broadband provider Windstream Holdings (WIN) posted a particularly steep loss after eliminating is quarterly dividend.

Considerable weakness also emerged among natural gas stocks, as reflected by the 3.1 percent drop by the NYSE Arca Natural Gas Index. The index ended the session at its lowest closing level in over a month.

Oil, biotechnology and banking stocks also moved to the downside on the day, while some strength was visible among railroad and networking stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the downside during trading on Thursday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both fell by 0.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index edged down by 0.2 percent, the French CAC 40 Index rose by 0.5 percent and the U.K.'s FTSE 100 Index advanced by 0.9 percent.

In the bond market, treasuries moved higher ahead of the monthly jobs report due on Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 2.228 percent.

Looking Ahead

Trading on Friday is likely to be impacted by reaction to the Labor Department's employment report for the month of July.

The Commerce Department is also scheduled to release its report on international trade in June. The trade deficit is expected to narrow to $45.0 billion.

On the earnings front, Activision Blizzard (ATVI), Con Edison (ED), Etsy (ETSY), GoPro (GPRO), Kraft Heinz (KHC), and TiVo (TIVO) are among the companies releasing their quarterly results after the close of today's trading.

AMC Entertainment (AMC), Cigna (CI), Newell Brands (NWL), and Toyota (TM) are also among the companies due to report their results before the start of trading on Friday.