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

(RTTNews) - With a mixed batch of economic data leading to some uncertainty about the outlook for the Federal Reserve's stimulus program, stocks showed a lack of direction throughout the trading day on Wednesday before closing roughly flat.

The major averages finished the day on opposite sides of the unchanged line. While the Nasdaq inched 0.80 points or less than a tenth of a percent to 4,038.00, the Dow dipped 24.85 points or 0.2 percent to 15,889.77 and the S&P 500 edged down 2.34 points or 0.1 percent to 1,792.81.

The choppy trading on Wall Street came as traders weighed upbeat jobs and housing data against a disappointing reading on service sector activity.

Before the start of trading, payroll processor ADP released a report showing stronger than expected private sector job growth in the month of November.

ADP said the private sector added 215,000 jobs in November following an upwardly revised increase of 184,000 jobs in October. Economists had expected private sector employment to increase by about 170,000 jobs.

The strong private sector job growth increased the focus on Friday's monthly jobs report from the Labor Department, which could have a significant impact on the outlook for the Fed's asset purchase program.

A separate report from the Commerce Department showed a substantial increase in new home sales in the month of October, with the increase in sales more than offsetting the decrease seen in September.

The report said new home sales jumped 25.4 percent to a seasonally adjusted annual rate of 444,000 in October after sliding 6.6 percent to 354,000 in September. Economists had expected new home sales to come in at a rate of 425,000.

The Commerce Department released the data for both October and September on the same day as a result of the recent government shutdown.

Meanwhile, the Institute for Supply Management also released a report showing an unexpected decrease by its reading on activity in the service sector.

The ISM said its non-manufacturing index fell to 53.9 in November from 55.4 in October, hitting its lowest level since June.

A reading above 50 indicates continued growth in the service sector, but economists had expected the index to inch up to a reading of 55.5.

Sector News

While most of the major sectors ended the day showing only modest moves, considerable strength was visible among gold stocks. The NYSE Arca Gold Bugs Index surged up by 2.2 percent, bouncing off a five-year closing low.

The rebound by gold stocks came amid a substantial increase by the price of the precious metal, with gold for February delivery jumping $26.40 to $1,247.20 an ounce.

Software, networking, and steel stocks also saw some strength on the day, while airline, defense, and retail stocks ended the day on the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 2.2 percent, while Hong Kong's Hang Seng Index fell by 0.8 percent.

The major European markets climbed off their worst levels but still ended the day in the red. While the German DAX Index dropped by 0.9 percent, the French CAC 40 Index slid by 0.6 percent and the U.K.'s FTSE 100 Index dipped by 0.3 percent.

In the bond market, treasuries saw considerable weakness amid worries about the outlook for monetary policy. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 6.6 basis points to 2.841 percent.

Looking Ahead

Economic data may continue to attract attention on Thursday, with reports on third quarter GDP, weekly jobless claims, and factory orders scheduled to be released.

Nonetheless, trading activity may be somewhat subdued as traders look ahead to the release of the monthly jobs report on Friday.