Stocks Close Roughly Flat Following Lackluster Trading Day - U.S. Commentary

(RTTNews) - After trending lower over the past few sessions, stocks showed a lack of direction throughout the trading day on Friday. Uncertainty about the outlook for the Federal Reserve's stimulus program contributed to the choppy trading on Wall Street.

The major averages bounced back and forth across the unchanged line before closing mixed. While the S&P 500 edged down 0.18 points or less than a tenth of a percent to 1,775.32, the Dow inched up 15.93 points or 0.1 percent to 15,755.36 and the Nasdaq crept up 2.57 points or 0.1 percent to 4,000.98.

For the week, the major averages all moved to the downside. The Dow dropped by 1.7 percent, while the Nasdaq and the S&P 500 slid by 1.5 percent and 1.6 percent, respectively.

While bargain hunting contributed to early strength on Wall Street following three days of losses, buying interest waned not long after the open.

Traders continued to express concerns about the outlook for the Fed's asset purchase program after the House voted to approve a bipartisan budget bill to keep the U.S. government operating for the next two fiscal years.

The House voted 332 to 94 in favor of the bill, which was outlined Tuesday by Rep. Paul Ryan, R-Wis., and Senator Patty Murray, D-Wash.

The budget plan erases the threat of another government shutdown in January and also addresses some of the automatic spending cuts known as the sequester.

Meanwhile, traders largely shrugged off a report from the Labor Department showing a modest decrease in producer prices in the month of November.

The Labor Department said its producer price index edged down by 0.1 percent in November following a 0.2 percent drop in October. The modest decrease matched economist estimates.

"Wholesale prices fell for the third straight month on lower energy and motor vehicle costs, showing little pipeline pressure for increased consumer prices," said Jay Morelock, an economist at FTN Financial.

He added, "With crude and intermediate goods falling as well, the Fed will not be concerned with upward price pressure as they head into their meeting next week to consider tapering asset purchases."

Core producer prices, which exclude food and energy prices, inched up by 0.1 percent in November after rising by 0.2 percent in October. The uptick in core prices also matched expectations.

Sector News

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

While some strength was visible among tobacco and telecom stocks, oil stocks moved to the downside amid a decrease by the price of crude.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 2225 Index rose by 0.4 percent, while China's Shanghai Composite Index fell by 0.3 percent.

Meanwhile, the major European markets all ended the day on the downside. While the French CAC 40 Index dipped by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both edged down by 0.1 percent.

In the bond market, treasuries closed slightly higher after coming under pressure over the course of the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ticked down by less than a basis point to 2.868 percent.

Looking Ahead

The Federal Reserve will take center stage next week, with the central bank due to announce its latest monetary policy decision on Wednesday.

Most economists do not expect the Fed to announce plans to begin scaling back its asset purchases, but traders will closely analyze the accompanying statement for any signals regarding future tapering.

While the Fed meeting will be in focus, traders are also likely to keep an eye on the release of reports on industrial production, housing starts, existing home sales, and regional manufacturing activity.