U.S. Stocks Give Back Ground After Seeing Early Strength

After moving mostly higher early in the session, stocks have given back ground over the course of the trading day on Thursday. The major averages have all pulled back off their highs of the session.

Currently, the major averages are turning in a mixed performance. While the Dow is down 16.97 points or 0.1 percent at 34,873.27, the S&P 500 is up 4.34 points or 0.1 percent at 4,519.21 and the Nasdaq is up 40.79 points or 0.3 percent at 14,060.10.

The early strength on Wall Street partly reflected recent upward momentum, with the major averages attempting to extend their recent winning streak to five sessions.

Positive sentiment was also generated in reaction to a Commerce Department report showing consumer price growth in the U.S. accelerated in line with economist estimates in the month of July.

The Commerce Department said the annual rate of consumer price growth increased to 3.3 percent in July from 3.0 percent in June. The faster growth matched expectations.

The reading on inflation also showed consumer prices rose 0.2 percent on a monthly basis in July, matching the uptick in June as well as economist estimates.

The report also said the annual rate of growth by core consumer prices, which exclude food and energy prices, inched up to 4.2 percent in July from 4.1 percent in June. The modest increase also matched expectations.

Core consumer prices rose by 0.2 percent on a monthly basis in July after edging up by 0.2 percent in June, in line with estimates.

The readings on prices for personal consumption expenditures are said to be the Federal Reserve’s preferred gauges of inflation.

“The lack of an inflation surprise to the upside should be cheered by markets because it is unlikely to move the Fed’s bias towards leaving rates unchanged at their next meeting,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

He added, “Not only is the Fed unlikely to raise rates at the next meeting, they are unlikely to raise rates again this year as long as inflation continues to remain contained.”

Buying interest has waned over the course of the session, however, as traders seem reluctant to make significant moves ahead of the release of the closely watched monthly jobs report on Friday.

Economists expect employment to increase by 170,000 jobs in August after climbing by 187,000 jobs in July, while the unemployment rate is expected to remain at 3.5 percent.

Sector News

Networking stocks continue to see substantial strength on the day, driving the NYSE Arca Networking Index up by 3.1 percent to its best intraday level in almost a month.

Ciena (CIEN) is leading the sector higher, soaring by 15.4 percent after reporting better than expected fiscal third quarter results.

Notable strength also remains visible among computer hardware stocks, as reflected by the 1.1 percent gain being posted by the NYSE Arca Computer Hardware Index.

On the other hand, gold stocks have moved to the downside over the course of the session, dragging the NYSE Arca Gold Bugs Index down by 1.2 percent.

The weakness among gold stocks comes amid a modest decrease by the price of the precious metal, with gold for December delivery slipping $5 to $1,968 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while China’s Shanghai Composite Index fell by 0.6 percent.

The major European markets also turned mixed on the day. While the German DAX Index rose by 0.4 percent, the U.K.’s FTSE 100 Index slid by 0.5 percent and the French CAC 40 Index declined by 0.7 percent.

In the bond market, treasuries are seeing modest strength after ending the previous session little changed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.9 basis points at 4.089 percent.

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