RTTNews - Stocks are struggling to find direction on Friday, with the major averages bouncing back and forth across the unchanged line. While stocks were initially boosted by trader reaction to some encouraging data from the labor market, buying interest waned shortly after the opening bell.

Before the start of trading, the Labor Department released a report showing that fell by much less than expected in the month of May. However, mitigating some of the optimism in the data was the unemployment rate, which rose more than expected to reach a new twenty-five year high.

In an interview with RTT News, Hugh Johnson, chief investment officer for Johnson Illington Advisors called the better than expected May payrolls reading extremely positive news.

Yes, we're still in a recession, we're still losing jobs.. things are still not great, but they're not as bad as they were, Johnson said. Everything is pointing towards a recovery in the economy.

Johnson also said the market's rather muted response to the employment report is due in part to a little bit of caution creeping into the market.

The major averages are currently all in positive territory, although they are well off the highs set earlier in the session. The Dow is currently up 55.62 at 8,805.86, the Nasdaq is up 5.23 at 1,855.25 and the S&P 500 is up 3.51 at 945.97.

Sector News

The major sector indices are split in afternoon dealing, contributing to the lack of conviction being shown by the major averages.

Significant strength is visible among shares of defense stocks, as reflected by the 2.9 percent advance by the Amex Defense Index. The day's gains have put the index in position to challenge its best level of the year, set in early January.

In addition, steel stocks are also seeing notable upside on the day, with the Amex Steel Index up by 2.8 percent, continuing to take back Wednesday's losses.

Meanwhile, gold stocks continue to post notable losses, ceding ground following the rally seen late last month. Subsequently, the Amex Gold Bugs Index is down by 3.9 percent, with the day's weakness prompted by a considerable pullback in the price of gold, which has dropped by $20 an ounce.

Biotechnology stocks are also taking a breather, with the Amex Biotechnology Index dropping by 1 percent. Further, chemical, semiconductor and airline stocks are also helping to mitigate the day's gains.

Stocks in the News

Shares of Jackson Hewitt Tax Service (JTX) are on the rise after the firm ushered in Harry Buckley as president and CEO. The firm's stock has climbed by 39.5 percent in afternoon trading, reaching its best intra-day level in three months. Oppenheimer Funds also raised their rating on the firm to Outperform from Perform following the day's news.

Quanta Services Inc. (PWR) is also climbing after Standard & Poor's said the firm would replace Ingersoll-Rand Company Ltd. (IR) in the S&P 500 on a date yet to be announced. Shares of Quanta are currently up by 3.7 percent after challenging their best intra-day level of the year earlier in the session.

Meanwhile, shares of Cascade (CAE) are retreating after the firm reported a first-quarter net loss of $12.1 million or $1.12 per share, compared to net income of $10.9 million or $0.98 per share in the same quarter last year. The stock has fallen by 15.9 percent, reaching its worst level in over three weeks.

In Focus: May Employment Data, Corporate News

As mentioned above, the Labor Department report showed that non-farm payroll employment fell by 345,000 jobs in May following a revised decrease of 504,000 jobs in April. Economists had expected a decrease of about 520,000 jobs compared to the loss of 539,000 jobs originally reported for the previous month.

At the same time, the report said that the unemployment rate jumped to 9.4 percent in May from 8.9 percent in April. With the increase, the unemployment rate came in above economist estimates of 9.2 percent and rose to its highest level since August of 1983.

On the corporate front, Anglo-Australian mining giant Rio Tinto (RTP) are moving higher after the company entered into a joint venture agreement with rival BHP Billiton and scrapped its $19.5 billion deal with Chinalco.

In lieu of its deal with Chinalco, Rio Tinto instead launched a heavily discounted $15.2 billion rights issue. The company also reported a decline in fiscal 2009 first-quarter earnings, adversely impacted by price movements and production volumes amid the downturn in economy.

Elsewhere, the Federal Deposit Insurance Corp. is pushing for a shake-up of Citigroup's (C) top management, imperiling Chief Executive Vikram Pandit, the Wall street Journal reported, citing people familiar with the matter.

The Journal reported that under Chairman Sheila Bair, the FDIC also recently pressed a fellow regulator to lower the government's confidential ranking of Citi's health - a change that would let regulators control the firm more tightly. Citigroup officials have argued that Bair is overstepping her authority.

Meanwhile, international retailer Guess (GES) said its first quarter profit fell 32 percent from last year, as revenue dropped and margins shrank. However, the company's quarterly earnings per share beat analysts' expectations. The firm's shares are up by 6.7 percent in afternoon trading.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished notably higher on Friday. Japan's benchmark Nikkei 225 Index rose by 1.0 percent, while Hong Kong's Hang Seng closed up by 1.0 percent.

The major European markets also ended the day higher. The U.K.'s FTSE 100 Index finished up by 1.2 percent, while the French CAC 40 Index and the German DAX Index closed up by 0.8 percent and 0.2 percent, respectively.

In the bond market, treasuries continue to show weakness, firmly entrenched in negative territory. Subsequently, the yield on the benchmark ten-year note is up to 3.824 percent, a climb of 10.8 basis points on the day.

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