Stocks Seeing Modest Strength In Morning Trading – U.S. Commentary

Stocks are seeing modest strength in morning trading on Friday following the release of the Labor Department’s closely watched monthly jobs report. Buying interest has remained subdued, however, limiting the upside for the major averages.

Currently, the major averages are all in positive territory, although the Nasdaq is up just 1.39 points or less than a tenth of a percent at 7,804.07 following the spike on Thursday. The Dow is up 75.40 points or 0.3 percent at 25,401.56 and the S&P 500 is up 6.96 points or 0.3 percent at 2,834.18.

Before the start of trading, the Labor Department released a report showing weaker than expected job growth in the month of July due in part to a drop in government employment and the closing of Toys “R” Us stores.

The report said non-farm payroll employment climbed by 157,000 jobs in July compared to economist estimates for a jump of about 190,000 jobs.

However, the report also showed upward revisions to the increases in employment in May and June, which surged up by 268,000 jobs and 248,000 jobs, respectively.

With the upward revisions, employment gains in May and June combined were 59,000 more than previously reported.

The report also showed a modest decrease in the unemployment rate, which edged down to 3.9 percent in July from 4.0 percent in June. The drop matched economist estimates.

Meanwhile, the Labor Department said the annual rate of average hourly employee earnings growth was unchanged from the previous month at 2.7 percent.

A separate report from the Commerce Department showed the U.S. trade deficit widened in the month of June amid an increase in imports and a decrease in exports.

The report said the trade deficit widened to $46.3 billion in June from a revised $43.2 billion in May. The deficit had been expected to widen to $46.5 billion from the $43.1 billion originally reported for the previous month.

The Institute for Supply Management also released a report showing growth in U.S. service sector activity slowed by much more than anticipated in the month of July.

The ISM said its non-manufacturing index dropped to 55.7 in July after rising to 59.1 in June. A reading above 50 still indicates service sector growth, although economists had expected a much more modest drop to 58.6.

Gold stocks have shown a substantial move to the upside in morning trading, driving the NYSE Arca Gold Bugs Index up by 2.1 percent. The index is bouncing off its lowest closing level in over two years.

The strength among gold stocks comes amid a rebound by the price of the precious metal, with gold for December delivery climbing $7.10 to $1,227.20 an ounce.

Bargain hunting is also contributing to significant strength among steel stocks, while most of the other major sectors are showing more modest moves.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while Hong Kong’s Hang Seng Index dipped by 0.1 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.’s FTSE 100 Index has jumped by 1.1 percent, the German DAX Index is up by 0.6 percent and the French CAC 40 Index is up by 0.3 percent.

In the bond market, treasuries are extending the modest upward move seen over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3 basis points at 2.956 percent.

by RTTNews Staff Writer

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