Stocks Close Roughly Flat Following Lackluster Session - U.S. Commentary

(RTTNews) - After ending the previous session sharply higher, stocks turned in a lackluster performance during trading on Thursday before closing roughly flat. The choppy trading came as traders continued to digest the Federal Reserve's decision to scale back its stimulus program.

The major averages eventually ended the day mixed, with the Dow posting a modest gain. The Dow inched up 11.11 points or 0.1 percent to 16,179.08, while the Nasdaq dipped 11.93 points or 0.3 percent to 4,058.13 and the S&P 500 edged down 1.05 points or 0.1 percent to 1,809.60.

While a positive reaction to the Fed's decision to start tapering its asset purchases drove stocks higher on Wednesday, traders seemed reluctant to continue making significant moves.

The rally in the previous session reflected the removal of the recent uncertainty regarding the timing of tapering as well as the Fed's assertion that it will keep interest rates at near-zero levels.

Early selling pressure was generated by a batch of disappointing economic data, but the reports seemed to be shrugged off as old news in light of the Fed's decision.

The Labor Department released a report before the start of trading showing an unexpected increase in initial jobless claims in the week ended December 14th.

The report said initial jobless claims climbed to 379,000, an increase of 10,000 from the previous week's figure of 369,000. Economists had expected jobless claims to drop to 337,000.

With the increase, jobless claims reached their highest level since late March, although the data likely reflected seasonal factors due to the holidays.

Not long after the open, the National Association of Realtors released a separate report showing a bigger than expected drop in existing home sales in the month of November.

NAR said existing home sales dropped 4.3 percent to a seasonally adjusted annual rate of 4.90 million in November after falling 3.2 percent to 5.12 million in October. Economists had expected existing home sales to dip to an annual rate of 5.02 million.

Existing home sales fell for the third consecutive month, dropping to their lowest level since a matching rate in December of 2012.

A separate report from the Philadelphia Federal Reserve showed that its index of regional manufacturing activity rose by much less than expected in December.

Sector News

Despite the lack of direction shown by the broader markets, gold stocks saw some further downside after bucking the uptrend seen in the previous session. The NYSE Arca Gold Bugs Index fell by 1.7 percent, ending the session at a five-year closing low.

The continued weakness among gold stocks came amid a sharp drop by the price of the precious metal, with gold for February delivery plummeting $41.40 to $1,193.60 an ounce.

Commercial real estate stocks also came under pressure, dragging the Morgan Stanley REIT Index down by 1.5 percent. The index gave back some ground after closing higher for four straight sessions.

Housing, oil service, and utilities stocks also moved to the downside on the day, while some strength was visible among steel and natural gas stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index jumped by 1.7 percent, while Hong Kong's Hang Seng Index slumped by 1.1 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index surged up by 1.4 percent, the French CAC 40 Index and the German DAX Index soared by 1.6 percent and 1.7 percent, respectively.

In the bond market, treasuries extended yesterday's downward move as traders continued to digest the Fed's decision to start tapering. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4 basis points to a new three-month closing high of 2.925 percent.

Looking Ahead

Following the slew of data released this morning, the economic calendar for Friday is relatively light, although the final report on third quarter GDP may attract some attention.

Additionally, Nike (NKE), Cintas (CTAS), and Red Hat (RHT) may be in focus after releasing their quarterly results after the close of today's trading.