Stocks Finish Lackluster Session Modestly Higher - U.S. Commentary

(RTTNews) - While buying interest was somewhat subdued, stocks moved modestly higher over the course of the trading session on Thursday. With the uptick on the day, the major averages added to the slim gains posted in the previous session.

The major averages closed just above the unchanged line. The Dow crept up 23.76 points or 0.1 percent to 18,597.70, the Nasdaq rose 11.49 points or 0.2 percent to 5,240.15 and the S&P 500 edged up 4.80 points or 0.2 percent to 2,187.02.

The modest strength on Wall Street partly reflected a positive reaction to earnings news from Wal-Mart (WMT), with the retail giant climbing by 1.9 percent on the day.

Before the start of trading, Wal-Mart reported better than expected second quarter results and raised its full-year guidance.

Networking giant Cisco Systems (CSCO) also reported fourth quarter results that topped analyst estimates and announced plans to cut up to 5,500 jobs or 7 percent of its workforce.

Nonetheless, traders seemed reluctant to make significant moves as they continued to digest the minutes of the Federal Reserve's latest meeting, which suggested that officials were mixed about the outlook for monetary policy.

The minutes from the July meeting revealed that Fed officials generally agreed that it was prudent to accumulate more economic data before removing monetary accommodation.

However, the Fed said "some" members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation.

Most economists still expect the Fed to leave interest rates unchanged at its next meeting in the latter part of September.

On the U.S. economic front, the Labor Department released a report this morning showing a modest decrease in initial jobless claims in the week ended August 13th.

The report said initial jobless claims edged down to 262,000, a decrease of 4,000 from the previous week's unrevised level of 266,000. Economists had expected jobless claims to dip to 265,000.

A separate report from the Philadelphia Federal Reserve showed tenuous growth in regional manufacturing activity in the month of August.

The Philly Fed said its diffusion index for current general activity climbed to a positive 2.0 in August from a negative 2.9 in July, with a positive reading indicating growth in regional manufacturing activity. The increase by the index matched economist estimates.

Additionally, the Conference Board released a report showing that its leading economic index rose by 0.4 percent in July following a 0.3 percent increase in June. Economists had expected the index to rise by another 0.3 percent.

Sector News

Energy stocks moved sharply higher over the course of the trading session, benefiting from a jump by the price of crude oil. Crude for September delivery surged up $1.43 to $48.22 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index soared by 4 percent and the Philadelphia Oil Service Index shot up by 2.5 percent.

Considerable strength was also visible among electronic storage stocks, as reflected by the 2.9 percent gain posted by the NYSE Arca Disk Drive Index. NetApp (NTAP) led the sector higher after reporting better than expected first quarter earnings.

Railroad, gold and utilities stocks also saw notable strength, while most of the other major sectors ended the day showing more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index slumped by 1.6 percent, while Hong Kong's Hang Seng Index advanced by 1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index climbed by 0.6 percent, the French CAC 40 Index rose by 0.4 percent and the U.K.'s FTSE 100 Index edged up by 0.1 percent.

In the bond market, treasuries moved moderately higher over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped by 2.5 basis points to 1.536 percent.

Looking Ahead

Trading activity on Friday may be somewhat subdued amid a lack of major U.S. economic data due to be released on the day.

On the earnings front, Gap (GPS) is releasing its second quarter results after the close of today's trading, while Deere (DE) and Foot Locker (FL) are due to report their results before the start of trading on Friday.