Stocks Close Roughly Flat Ahead Of Greek Referendum - U.S. Commentary

(RTTNews) - With traders reluctant to make any significant moves going into the long weekend, stocks showed a lack of direction over the course of the trading day on Thursday. The major averages bounced back and forth across the unchanged line before closing roughly flat.

The major averages eventually finished the session slightly lower. The Dow slipped 27.80 points or 0.2 percent to 17,730.11, the Nasdaq dipped 3.91 points or 0.1 percent to 5,009.21 and the S&P 500 edged down 0.64 points or less than a tenth of a percent to 2,076.78.

For the holiday-shortened week, the Nasdaq tumbled by 1.4 percent, while the Dow and the S&P 500 both slumped by 1.2 percent.

The choppy trading on Wall Street came as traders expressed some uncertainty about the outcome of the Greek referendum on Sunday.

Conflicting opinion polls have added to the ambiguity about whether Greeks will vote to endorse the austerity measures proposed by the country's international creditors or reject the terms.

Greek Prime Minister Alexis Tsipras has called on Greeks to vote "no" in the referendum, which he claimed is not an up or down vote on Greece's membership in the eurozone.

Tsipras argued that voting against the proposals offered by creditors would give the government more leverage in the negotiations.

German Chancellor Angela Merkel and Eurogroup President Jeroen Dijsselbloem have both said further negotiations will have to wait until after the referendum.

Traders were also reacting to the U.S. Labor Department's monthly jobs report, which showed weaker than expected job growth but a bigger than expected decrease in the unemployment rate.

The Labor Department said non-farm payroll employment increased by 223,000 jobs in June, modestly below the addition of 230,000 jobs anticipated by economists.

The report also showed downward revisions to the pace of job growth in April and May, with the job gains in the two months combined coming in 60,000 lower than previously reported.

Nonetheless, the unemployment rate still fell to 5.3 percent in June from 5.5 percent in May. Economists had expected the unemployment rate to dip to 5.4 percent.

The bigger than expected decrease pulled the unemployment rate down to its lowest level since hitting 5.0 percent in April of 2008.

The drop in the unemployment rate was primarily due to a steep drop in the size of the labor force, however, with the civilian labor force tumbling by 432,000 people.

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 upside, however, with the NYSE Arca Gold Bugs Index surging up by 2.1 percent. The gain by the index came after it ended the previous session at its worst closing level in nearly twelve years.

The rebound by gold stocks came despite a decrease by the price of the precious metal, as gold for August delivery slid $5.80 to $1,163.50 an ounce.

Utilities stocks also turned in a strong performance, driving the Dow Jones Utilities Average up by 1.4 percent. With the gain, the average climbed further off the nine-month closing low set on Tuesday.

On the other hand, banking stocks saw some weakness on the day, giving back ground after helping to lead the rebound seen over the two previous sessions.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, although China's Shanghai Composite Index bucked the uptrend once again. Japan's Nikkei 225 Index jumped by 1 percent, while Hong Kong's Hang Seng Index edged up by 0.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the German DAX Index fell by 0.7 percent and the French CAC 40 Index slumped by 1 percent.

In the bond market, treasuries regained some ground following the steep drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points to 2.393 percent.

Looking Ahead

Following the long holiday weekend, next week's trading is likely to be impacted by reaction to the outcome of the Greek referendum.

Reports on U.S. service sector activity and trade may also attract some attention along with the minutes of the latest Federal Reserve meeting and a speech by Fed Chair Janet Yellen.