U.S. Stocks Showing A Lack Of Direction After Seeing Initial Strength

After an initial move to the upside, stocks have shown a lack of direction over the course of morning trading on Friday. The major averages have been bouncing back and forth across the unchanged line following the sell-off seen late in the previous session.

Currently, the major averages are turning in a mixed performance. While the Dow is down 51.67 points or 0.2 percent at 34,626.68, the Nasdaq is up 31.75 points or 0.2 percent at 14,252.27 and the S&P 500 is up 1.24 points or less than a tenth of a percent at 4,531.65.

The choppy trading on Wall Street comes as traders express some uncertainty about the outlook for the markets after the major averages experience their first negative quarter since the first quarter of 2020.

For the first three months of 2022, the Nasdaq plummeted by 9.1 percent and the S&P 500 and Dow dove by 4.9 percent and 4.6 percent, respectively, although the major averages regained some ground in March.

Traders are also digesting the Labor Department’s closely watched monthly jobs report, which showed employment increased by less than expected in March but the unemployment rate still fell to a new pandemic-era low.

The report showed non-farm payroll employment jumped by 431,000 jobs in March after surging by an upwardly revised 750,000 jobs in February.

Economists had expected employment to spike by 490,000 jobs compared to the addition of 678,000 jobs originally reported for the previous month.

While the job growth in March fell short of estimates, revisions to data for the two previous months showed employment increased by 95,000 more jobs than previously reported.

The strong job growth still contributed to a drop in the unemployment rate, which dipped to 3.6 percent in March from 3.8 percent in February. The unemployment rate was expected to edge down to 3.7 percent.

With the bigger than expected decrease, the unemployment rate fell to its lowest level since hitting 3.5 percent in February of 2020.

Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics, said the report “reinforces the Federal Reserve’s strong resolve to rein in inflation and bolsters the case for a 50 basis point rate hike at the May meeting.”

A separate report from the Institute for Supply Management unexpectedly showed a modest slowdown in the pace of growth in U.S. manufacturing activity in the month of March.

Oil service stocks have shown a substantial move to the upside in morning trading, driving the Philadelphia Oil Service Index up by 2.1 percent.

The rally by oil service stocks comes as the price of crude oil for May delivery has shown a notable rebound after dipping below $100 a barrel.

Steel stocks are also turning in a strong performance on the day, as reflected by the 1.7 percent gain being posted by the NYSE Arca Steel Index.

Considerable strength has also emerged among biotechnology stocks, resulting in a 1.6 percent advance by the NYSE Arca Biotechnology Index climbing.

On the other hand, transportation stocks have come under pressure over the course of the morning, dragging the Dow Jones Transportation Average down by 2.7 percent.

Computer hardware and semiconductor stocks have also moved to the downside, with the NYSE Arca Computer Hardware Index and the Philadelphia Semiconductor both falling by 1.3 percent.

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 advanced by 0.9 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the German DAX Index has risen by 0.5 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both up by 0.4 percent.

In the bond market, treasuries are pulling back sharply after trending higher over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 10.7 basis points at 2.434 percent.

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