Stocks Close Roughly Flat After Seeing Initial Weakness - U.S. Commentary

(RTTNews) - After recovering from an early move to the downside, stocks showed a lack of direction throughout afternoon trading on Thursday. The major averages eventually ended the choppy trading day nearly flat after falling sharply in recent sessions.

The major averages finished the session on opposite sides of the unchanged line. While the Dow edged down 24.50 points or 0.2 percent to 16,117.24, the Nasdaq inched up 2.07 points or 0.1 percent to 4,217.39 and the S&P 500 crept up 0.27 points or less than a tenth of a percent to 1,862.76.

The initial weakness on Wall Street reflected ongoing concerns about global economic growth along with worries about an expansion of the Ebola outbreak in the U.S.

Traders seemed to ignore a batch of largely upbeat U.S. economic data, including reports showing an unexpected drop in initial jobless claims and a bigger than expected increase in industrial production.

James Knightley, an economist at ING Bank, said, "Today's data suggests that the U.S. economy remains in pretty good shape even if bond and equity markets have their doubts."

The subsequent rebound by the markets was largely in reaction to comments from St. Louis Federal Reserve Bank President James Bullard.

In an interview with Bloomberg News, Bullard suggested that the Fed should consider delaying the end of its asset purchase program to halt the decline in inflation expectations.

Bullard also told Bloomberg that U.S. economic fundamentals remain strong and blamed the recent market turmoil on downgrades in the outlook for Europe.

The Fed has previously indicated that it plans to bring its asset purchase program to a close at its next monetary policy meeting later this month.

Sector News

While many of the major sectors ended the day showing modest moves, substantial strength was visible among natural gas stocks. The NYSE Arca Natural Gas Index shot up by 2.7 percent, continuing to regain ground after ending Tuesday's trading at its lowest closing level in over a year.

Chesapeake Energy (CHK) helped to lead the natural gas sector higher, jumping by 17 after announcing the sale of shale assets to Southwestern Energy (SWN) for $5.375 billion.

Airline stocks also saw considerable strength on the day, driving the NYSE Arca Airline Index up by 2.2 percent. JetBlue (JBLU) posted a standout gain, surging up by 9 percent to its best closing level in over a month.

Significant strength was also visible among oil stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Oil & Gas Index. The index bounced off an eight-month closing low, as crude for November delivery climbed $0.92 to $82.70 a barrel.

Railroad, semiconductor, and biotechnology stocks also turned in strong performances on the day, while weakness remained visible among internet and pharmaceutical stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index tumbled by 2.2 percent, while Hong Kong's Hang Seng Index slumped by 1 percent.

Meanwhile, the major European markets ended the day mixed. While the German DAX Index edged up by 0.1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index fell by 0.3 percent and 0.5 percent, respectively.

In the bond market, treasuries came under pressure on the day after moving sharply higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 6.3 basis points to 2.153 percent.

Looking Ahead

Economic data may attract some attention on Friday, with traders likely to keep an eye on reports on housing starts and consumer sentiment.

On the earnings front, tech giant Google (GOOG) is among the companies releasing their quarterly results after the close of today's trading, while General Electric (GE) are Honeywell (HON) are due to report their results before the start of trading on Friday.