Stocks May See Modest Weakness In Early Trading - U.S. Commentary

A report from the Labor Department showed that consumer prices came in unchanged in the month of April, with a notable decrease in energy prices offsetting another substantial increase in tobacco prices.

The Labor Department said its consumer price index was unchanged in April after edging down by an unrevised 0.1 percent in March. The lack of growth in consumer prices came in line with the expectations of economists.

At the same time, the report showed that the core consumer price index, which excludes food and energy prices, rose 0.3 percent in April after rising 0.2 percent in each of the three previous months. Economists had expected core prices to edge up 0.1 percent.

Separately, the New York Federal Reserve said its index of regional manufacturing activity rose to a negative 4.6 in May from a negative 14.7 in April, although a negative reading still indicates a contraction in activity. The index had been expected to rise to a negative 12.0.

Trading could also be impacted by the release of reports on industrial production and capacity utilization in April as well as consumer sentiment in May.

Meanwhile, earnings season is winding to a close, with retailer JC Penney (JCP) reporting first quarter earnings of $0.11 per share compared to$0.54 per share in the same quarter last year. The earnings edged out analyst estimates for earnings of $0.10 per share.

More retailer earnings came from Abercrombie & Fitch (ANF), which reported a first quarter loss of $0.31 per share compared to earnings of $0.69 per share in the year-ago quarter. Wall Street analysts had expected a net loss of $0.14 per share.

In other news, athletic apparel maker, Nike, Inc. (NKE) said that it would eliminate about 1,750 jobs or 5 percent of its global workforce as part of the company's realignment initiative to boost competitiveness.

In other news, insurer and financial services provider Hartford Financial (HIG) announced Thursday that it received preliminary approval for a $3.4 billion participation in the Treasury's Troubled Assets Relief Program, or TARP. Lincoln National (LNC) also revealed that it received approval for a $2.5 billion participation in TARP.

Stocks regained some ground during trading on Thursday, as the major averages all ended the day firmly in positive territory, as traders picked up stocks at reduced levels.

The strength in the markets came as traders went bargain hunting following some recent weakness, shrugging off a report from the Labor Department showing a bigger than expected increase in first-time claims for unemployment benefits in the week ended May 9th.

While the major averages moved off their highs going into the close, they remained firmly positive. The Dow closed up 46.43 points at 8,331.32, the Nasdaq closed up 25.02 points at 1,689.21 and the S&P 500 closed up 9.15 points at 893.07.

In early commodities trading, crude oil futures are down $1.01 at $57.61 a barrel following an increase on Thursday, when oil rose $0.60 to $58.62 a barrel. Meanwhile, gold futures are currently down $2.70 at $925.70 an ounce after ending the previous session up $2.50 to $928.4 an ounce.

On the currency front, the U.S. dollar has moved higher against the euro, climbing to $1.3530 while moving to $1.5200 against the pound. The buck has slipped against the yen, trading at 95.16 in early morning dealing.

In overseas trading, stock markets across the Asia-Pacific region finished mostly higher on Friday. Japan's benchmark Nikkei 225 Index rose 1.8 percent, while Hong Kong's Hang Seng Index climbed 1.5 percent.

Meanwhile, the major European markets are currently turning in a mixed performance. While the French CAC 40 Index is up 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both down 0.6 percent.

For comments and feedback: contact editorial@rttnews.com