Stocks Remain Positive In Mid-Day Trading After Early Recovery - U.S. Commentary

(RTTNews) - Stocks have turned higher over the course of the trading session on Friday after moving to the downside at the open. The volatility seen thus far on the day comes as traders digest some key U.S. economic data.

In recent trading, the major averages have pulled back off their best levels, but they currently remain positive. The Dow is up 34.67 points or 0.2 percent at 17,719.76, the Nasdaq is up 18.12 points or 0.4 percent at 4,887.97 and the S&P 500 is up 1.56 points or 0.1 percent at 2,061.30.

The initial weakness on Wall Street came following the release of the Labor Department's closely watched monthly jobs report.

The report said non-farm payroll employment climbed by 215,000 jobs in March after jumping by an upwardly revised 245,000 in February. Economists had expected an increase of about 210,000 jobs.

Nonetheless, the Labor Department also said the unemployment rate inched up to 5.0 percent in March from 4.9 percent in February. The unemployment rate had been expected to remain unchanged.

The unexpected uptick by the unemployment rate came as more people entered the workforce, as the labor force jumped by 396,000 people while household employment increased by 246,000 people.

However, stocks rebounded following the release of a separate report from the Institute for Supply Management showing a stronger than expected rebound in manufacturing activity in March.

The ISM said its purchasing managers index climbed to 51.8 in March from 49.5 in February, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 50.5.

With the bigger than expected increase, the index indicated the first month of growth in the manufacturing sector since last August.

The University of Michigan also reported a smaller than previously estimated drop in consumer sentiment in March, while the Commerce Department reported an unexpected decrease in construction spending in February.

James Smith, Developed Markets Economist at ING, said, "Taken as an aggregate, today's U.S. data is fairly encouraging and crucially, will give the data-dependent FOMC more confidence about the direction of the U.S. economy."

Sector News

Despite the rebound shown by the broader markets, resource stocks continue to see substantial weakness in mid-day trading.

Energy stocks have shown a significant move to the downside on the day, moving lower along with the price of crude oil. Crude for May delivery is currently tumbling $1.29 to $37.05 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index has plunged by 3.6 percent, the NYSE Arca Natural Gas Index is down by 2.5 percent and the NYSE Arca Oil & Gas Index is down by 1.8 percent.

Considerable weakness is also visible among gold stocks, as reflected by the 2.2 percent drop by the NYSE Arca Gold Bugs Index. The weakness in the sector comes as gold for June delivery has plummeted $20.50 to $1,215.10 an ounce.

Transportation stocks are also seeing notable weakness on the day, resulting in a 1.4 percent decline by the Dow Jones Transportation Average. United Continental (UAL) is posting a steep loss after being downgraded to Hold at Deutsche Bank.

On the other hand, biotechnology stocks have shown a strong move to the upside, driving the NYSE Arca Biotechnology Index up by 2.1 percent. The index is on pace to end the session at its best closing level in two months.

Regeneron (REGN) has helped to lead the biotech sector higher after reporting positive late-stage trial results for the eczema treatment the company is developing with Sanofi (SNY).

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index plunged by 3.6 percent, while Hong Kong's Hang Seng Index tumbled by 1.3 percent.

The major European markets also came under pressure on the day. While the U.K.'s FTSE 100 Index dropped by 0.5 percent, the French CAC 40 Index and the German DAX Index slumped by 1.4 percent and 1.7 percent, respectively.

In the bond market, treasuries have shown a lack of direction as traders digest the day's economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.781 percent.