Stocks Recover From Early Lows But Still Close In The Red - U.S. Commentary

(RTTNews) - After coming under pressure early in the session, stocks once again staged a recovery attempt over the course of the trading day on Friday. Unlike in the two previous sessions, however, the major averages finished the day in the red.

The major averages closed in negative territory but well off their lows for the session. The Dow edged down by 31.50 points or 0.2 percent to 17,807.06, the Nasdaq slid 28.85 points or 0.6 percent to 4,942.52 and the S&P 500 dipped 6.13 points or 0.3 percent to 2,099.13.

For the holiday-shortened week, the major averages turned in a mixed performance. While the Dow fell by 0.4 percent, the S&P 500 closed nearly flat and the Nasdaq crept up by 0.2 percent.

The early weakness on Wall Street came as the Labor Department's highly anticipated monthly jobs report showed much weaker than expected job growth.

Before the start of trading, the Labor Department said employment edged up by just 38,000 jobs in May compared to economist estimates for an increase of about 158,000 jobs.

The much weaker than expected job growth in May reflected the smallest increase in employment since September of 2010.

The job gains in March and April were also downwardly revised to 186,000 and 123,000, respectively, reflecting a net downward revision of 59,000 jobs.

While the weak job growth partly reflected a recent strike by Verizon (VZ) workers, the data still raised some concerns about the economy.

A separate report from the Institute for Supply Management showed that growth in service sector activity slowed by much more than expected in May.

The ISM said its non-manufacturing index fell by 2.8 points to 52.9 in May after climbing by 1.2 points to 55.7 in April.

While a reading above 50 continues to indicate growth in the service sector, economists had expected the index to show a more modest drop to 55.5.

Analysts have suggested the data eliminates the possibility the Federal Reserve will raise interest rates this month and could delay any rate hike until at least September.

Sector News

Despite the recovery attempt by the broader markets, financial stocks remained firmly negative amid concerns the disappointing data will keep interest rates near record low levels for the foreseeable future.

Reflecting the weakness in the financial sector, the Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index both slumped by 2.2 percent.

Biotechnology stocks also remained under pressure, giving back ground following recent strength. The NYSE Arca Biotechnology Index tumbled by 2 percent, pulling back off yesterday's nearly five-month closing high.

On the other hand, gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 11.6 percent. The rally came as gold for August delivery soared $30.30 to $1,242.90 an ounce.

Interest rate-sensitive utilities stocks also turned in a strong performance, with the Dow Jones Utilities Average climbing 1.6 percent to a record closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index and China's Shanghai Composite Index both advanced by 0.5 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.

Meanwhile, the major European markets ended the day mixed. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index and the German DAX Index both slumped by 1 percent.

In the bond market, treasuries spiked higher on the heels of the disappointing economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 10.7 basis points to a nearly two-month closing low of 1.704 percent.

Looking Ahead

Following the slew of U.S. economic data released over the past week, the economic calendar for next week is relatively quiet.

However, traders are likely to keep a close eye on remarks by Fed Chair Janet Yellen on Monday, particularly on the heels of today's disappointing data.