Stocks Turn Lower Following Disappointing Economic Data - U.S. Commentary

(RTTNews) - Stocks have turned mostly negative over the course of the trading day on Friday after failing to sustain an initial upward move. With the downturn, the Dow and the S&P 500 are pulling back further off their recent record highs.

The major averages have climbed off their lows for the session in recent trading but currently remain in the red. The Dow is down 11.59 points or 0.1 percent at 17,811.48, the Nasdaq is down 16.80 points or 0.4 percent at 4,719.25 and the S&P 500 is down 3.10 points or 0.2 percent at 2,055.80.

The weakness that has emerged on Wall Street is largely due to the release of some disappointing U.S. economic data.

Not long after the start of trading, the Institute for Supply Management released a report showing a significant slowdown in the pace of growth in the manufacturing sector in the month of December.

The ISM said its purchasing managers index fell to 55.5 in December from 58.7 in November, although a reading above 50 indicates continued growth in the manufacturing sector.

Economists had expected the index to drop to 57.5. With the bigger than expected decrease, the index fell to its lowest level since hitting 55.3 in June.

A separate report from the Commerce Department showing an unexpected drop in construction spending in November has also generated some negative sentiment.

The disappointing data offset early buying interest generated by comments from European Central Bank president Mario Draghi adding to speculation that the bank will provide further stimulus.

In an interview with German financial daily Handelsblatt, Draghi said that the risk of deflation in the euro area has risen and said the ECB is preparing to react to such a threat.

Draghi's comments suggested that the ECB is moving closer to unleashing full-blown quantitative easing, including sovereign bond purchases.

Sector News

Trucking stocks are turning in some of the market's worst performances on the day, dragging the Dow Jones Trucking Index down by 1.3 percent. With the loss, the index is pulling back further off the record closing high it set Christmas Eve.

Quality Distribution (QLTY) and YRC Worldwide (YRCW) are posting notable losses within the trucking sector, falling by 2.7 percent and 2.3 percent, respectively.

Significant weakness has also emerged among computer hardware stocks, as reflected by the 1.1 percent loss being posted by the NYSE Arca Computer Hardware Index. The index has been trending lower since setting a record closing high last Friday.

Steel, airline, and railroad stocks are also seeing notable weakness, while gold stocks have shown a strong move to the upside on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, although several markets remained closed on the day. Hong Kong's Hang Seng Index surged up by 1.1 percent, while Australia's All Ordinaries Index climbed by 0.5 percent.

Meanwhile, the major European markets ended the day in the red. While the U.K.'s FTSE 100 Index fell by 0.3 percent, the German DAX Index and the French CAC 40 Index dropped by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries have moved notably higher on the heels of the disappointing U.S. economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.9 basis points at 2.111 percent.