U.S. Stocks Close Little Changed Following Choppy Trading Day

Following the volatility seen over the course of the previous session, stocks continue to experience choppy trading on Friday. The major averages spent the day bouncing back and forth across the unchanged line before eventually closing mixed.

While the Dow edged down 25.23 points or 0.1 percent to 29,398.08, the Nasdaq inched up 19.21 points or 0.2 percent to 9,731.18 and the S&P 500 crept up 6.22 points or 0.2 percent to 3,380.16.

Despite the mixed performance on the day, the major averages all moved higher for the week. While the Nasdaq soared by 2.2 percent, the S&P 500 surged up by 1.6 percent and the Dow jumped by 1 percent.

Traders have recently shown a predilection toward buying despite signs of mounting headwinds, but the release of a mixed batch of U.S. economic data finally gave them pause.

While the Commerce Department released a report before the start of trading showing U.S. retail sales rose in line with estimates in January, closely watched core retail sales came in unchanged.

The Commerce Department said retail sales rose by 0.3 percent in January after edging up by a downwardly revised 0.2 percent in December.

Economists had expected retail sales to climb by 0.3 percent, matching the increase originally reported for the previous month.

However, the report said closely watched core retail sales, which exclude autos, gasoline, building materials and food services, were unchanged in January after rising by a downwardly revised 0.2 percent.

Core retail sales were expected to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month.

“After a rare contraction in the fourth quarter, the 3m/3m annualized growth rate of control group sales slipped further to -0.7% in January,” said Andrew Hunter, Senior U.S. Economist at Capital Economics,

He added, “That means there are now clear downside risks to our initial forecast that real consumption growth will rebound back above 2% annualized in the first quarter.”

The Federal Reserve also released a report showing a continued decrease in U.S. industrial production in the month of January, as unseasonably warm weather led to another steep drop in utilities output.

The Fed said industrial production fell by 0.3 percent in January following a revised decrease of 0.4 percent in December. Economists had expected industrial production to dip by 0.2 percent.

Manufacturing output edged down by 0.1 percent in January after inching up by 0.1 percent in December, as Boeing (BA) significantly slowed production of civilian aircraft amid the grounding of its troubled 737 Max.

Meanwhile, the University of Michigan released a report showing an unexpected increase in U.S. consumer sentiment in the month of February.

Preliminary data showed the consumer sentiment index rose to 100.9 percent in February from the final January reading of 99.8. The uptick surprised economists, who had expected the index to edge down to 99.5.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Considerable weakness was visible among networking stocks, however, with the NYSE Arca Networking Index slumping by 1.3 percent.

Arista Networks (ANET) posted a steep loss even though the networking company reported better than expected fourth quarter results.

Gold stocks also saw considerable weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 1.2 percent. The weakness in the sector came despite an increase by the price of gold.

Transportation, natural gas and steel stocks also showed notable moves to the downside, while some strength was visible among commercial real estate and software stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index slid by 0.6 percent, while China’s Shanghai Composite Index rose by 0.4 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index closed just below the unchanged line, the French CAC 40 Index and the U.K.’s FTSE 100 Index fell by 0.4 percent and 0.6 percent, respectively.

In the bond market, treasuries moved higher following the mixed data, adding to yesterday’s modest gains. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 1.588 percent.

Looking Ahead

Following the long holiday weekend, next week’s trading may be impacted by reaction to reports on producer prices, housing starts, and existing home sales.

The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which may shed additional light on the outlook for interest rates.

Retail giant Walmart (WMT) is also among a slew of companies scheduled to report their quarterly results next week.

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