U.S. Stocks Move Modestly Lower After Seeing Early Strength

After moving to the upside early in the session, stocks have moved mostly lower over the course of morning trading on Friday. The major averages have all pulled back off their highs of the session and into negative territory.

Currently, the major averages are posting modest losses on the day. The Dow is down 99.73 points or 0.3 percent at 34,887.29, the Nasdaq is down 9.68 points or 0.1 percent at 14,533.45 and the S&P 500 is down 7.20 points or 0.2 percent at 4,352.83.

The initial strength on Wall Street partly reflected a positive reaction to a report from the Commerce Department showing an unexpected increase in retail sales in the month of June.

The Commerce Department said retail sales climbed by 0.6 percent in June after plunging by a revised 1.7 percent in May.

The rebound surprised economists, who had expected retail sales to fall by 0.4 percent compared to the 1.3 percent slump originally reported for the previous month.

Excluding a steep drop in sales by motor vehicle and parts dealers, retail sales jumped by an even stronger 1.3 percent in June following a revised 0.9 percent decrease in May.

Economists had been expecting ex-auto sales to increase by 0.4 percent compared to the 0.7 percent drop originally reported for the previous month.

Buying interest has waned over the course of the morning, however, with a separate report from the University of Michigan showing an unexpected slump in consumer sentiment generating some negative sentiment.

The report showed the consumer sentiment index slumped to 80.8 in July from 85.5 in June. The decrease surprised economists, who had expected the index to inch up to 86.5.

“Rather than job creation, halting and reversing an accelerating inflation rate has now become a top concern,” said Surveys of Consumers chief economist Richard Curtin, noting that inflation has put added pressure on living standards and caused postponement of large discretionary purchases.

Oil service stocks are extending a recent sell-off amid a continued decrease by the price of crude oil. With crude for August delivery falling $0.83 to $70.82 a barrel, the Philadelphia Oil Service Index has plunged by 2.7 percent to a two-month intraday low

Substantial weakness is also visible among steel stocks, as reflected by the 2.2 percent slump by the NYSE Arca Steel Index.

Gold stocks have also shown a notable move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 2 percent.

The weakness among gold stocks comes amid a decrease by the price of the precious metal, with gold for August delivery sliding $15.30 to $1,813.70 an ounce.

Oil producer, biotechnology and banking stocks are also seeing notable weakness on the day, while interest rate-sensitive utilities and commercial real estate stocks have moved to the upside.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index slumped by 1 percent, while Australia’s S&P/ASX 200 Index rose by 0.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index has slumped by 1.1 percent, the German DAX Index is down by 0.9 percent and the U.K.’s FTSE 100 Index is down by 0.4 percent.

In the bond market, treasuries are seeing modest weakness after moving notably higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.8 basis points at 1.315 percent.

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