RTTNews - Stocks are showing a lack of direction in mid-afternoon trading on Friday, extending the lackluster performance seen throughout the session. Traders are cautiously optimistic following May's employment data, which came in far better than expected.

Ahead of the opening bell on Wall Street, the Labor Department released a report showing that employment declined at a slower than expected pace in the month of May. However, mitigating some of the optimism was the unemployment rate, which rose more than expected to reach a new twenty-five year high.

While the data contributed to some early strength in the markets, the major averages were unable to sustain the initial upward move and have seen considerable volatility since then.

The major averages are currently turning in a mixed performance, with the Dow posting a modest gain. While the Dow is currently up 12.06 at 8,762.30, the Nasdaq is up 6.86 at 1,843.16 and the S&P 500 is up 3.43 at 939.03.

Dow Components

While a majority of the Dow components are trading in negative territory, strong gains by some of the blue chip stocks are contributing to the modest gain currently being shown by the index.

Hewlett Packard (HPQ) is turning in one of the Dow's best performances, rising by 2.7 percent on the day. With the advance, the stock has reached its best intraday level in well over four months.

Boeing (BA) is also extending a recent upward move, showing a jump of 4.2 percent on the session. At their high for the session, shares of the airplane manufacturer were at seven-month intraday high.

Shares of United Technologies (UTX), Alcoa (AA) and 3M (MMM) are also posting notable gains.

On the other hand, the Dow is being limited by shares of DuPont (DD), which have slipped by 6.1 percent, testing a monthly low. The move comes after the stock was downgraded to Underperform from Neutral by Bank of America.

Kraft Foods (KFT) is also slipping, trading down by 2 percent, backing off of the five-month high reached in the previous session.

Further, Home Depot (HD) and JP Morgan Chase (JPM) and are also showing notable moves to the downside, falling 2 percent and 1.6 percent, respectively.

Sector News

Despite the lackluster performance by the broader markets, gold stocks continue to see considerable weakness. The Amex Gold Bugs Index is down 5.2 percent, prompted by a considerable retreat in the price of gold, which fell nearly $20 an ounce.

The sector is being led lower by shares of Kinross Gold (KGC), which are down by 6.9 percent on the day. With the decline, the stock is pulling back further off the ten-month high it set on Tuesday.

Additional weakness is present in semiconductor, banking, and housing stocks. The losses by the semiconductor stocks come after the Semiconductor Industry Association forecast a 29 percent decline in semiconductor sales for the year.

Meanwhile, defense stocks are holding onto strong gains, as reflected by the 2.5 percent advance by the Philadelphia Defense Sector Index. The day's gains put the index at its best intraday level in nearly five months earlier in the session.

Steel stocks are also in the green, with the Amex Steel Index up by 2 percent, further offsetting Wednesday's steep loss.

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.

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.

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.

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 6.1 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 3.854 percent, a climb of 13.8 basis points on the day.

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