RTTNews - After seeing modest strength at the opening bell, stocks have ceded their gains and are lingering near the unchanged mark in mid-morning trading on Thursday. The major averages are little changed as traders have largely shrugged off the day's economic news, choosing to remain on the sidelines ahead of tomorrow's monthly employment report.

The Labor Department released a report before the open showing that jobless claims edged down to 570,000 in the week ended August 29th from the previous week's revised figure of 574,000. Economists expected jobless claims to slip to 564,000 from the 570,000 originally reported for the previous week.

Jobless claims have stabilized in recent weeks, holding well off the highs set in the Spring but still at a relatively high level indicating continued weakness in the labor market.

Traders were also presented with a report on the health of the service sector from the Institute for Supply Management. The index of activity in the service sector rose to 48.4 in August from 46.4 in July, although a reading below 50 still indicates a contraction in the sector. Economists had been expecting a slightly lower reading of 48.0.

On the corporate front, membership warehouses operator Costco Wholesale Corp. (COST) reported a 2 percent decline in its August comparable-store sales, while analysts had expected a 5.7 percent drop.

Macy's (M) same store sales slid by 8.1 percent versus the 7.4 percent dip expected by analysts, while American Eagle (AEO) said its sales fell by 4 percent compared to the forecast 9.4 percent decline.

In other corporate news, Japan-based Dainippon Sumitomo Pharma, or DSP, and specialty pharmaceutical company Sepracor Inc. (SEPR) revealed that they have entered into a definitive agreement whereby DSP will acquire Sepracor for about $2.6 billion.

The major averages are currently turning in a mixed performance, although they are all nearly unchanged. While the Nasdaq is currently down 2.19 at 1,964.88, the Dow is up 7.48 at 9,288.15 and the S&P 500 is up 1.45 at 996.20.

Sector News

While most of the major sectors are showing only modest moves, gold stocks are on the rise, building on yesterday's rally. The NYSE Arca Gold Bugs Index is up by 2.1 percent, climbing to a three-month intraday high.

The continued strength in the gold sector comes as the price of the precious metal is extending a recent upward move, with gold for December delivery currently up $6.80 at $685.30 an ounce.

Banking stocks have also shown a notable move back to the upside after seeing some weakness in recent sessions. After ending the three previous sessions in the red, the Kbw Bank Index is currently up 1.7 percent.

While airline, steel, and oil service stocks are also seeing some strength, housing and health insurance stocks are showing notable weakness in mid-morning trading. The Philadelphia Housing Sector Index and the Morgan Stanley Healthcare Payor Index are currently down 0.8 percent and 0.7 percent, respectively.

Stocks Driven By Analyst Comments

Cubic (CUB) is on the rise in mid-morning trading following an upgrade at JP Morgan Chase. The broker raised its rating on the stock to Overweight from Neutral and lifted its price target to $43 from $38. The stock is up by 5.7 percent, moving further off of the nearly two-month closing low it set late last month.

Franklin Resources (BEN) is also moving higher after being upgraded to Outperform from Market Perform at Keefe Bruyette & Woods. The broker cited the firm's better than expected third quarter performance as a reason for the ratings change. The stock is advancing by 2.6 percent, continuing to hover near August's ten-month high.

On the other hand, Harte-Hanks Inc. (HHS) is retreating after a downgrade by BMO Capital Markets to Underperform from Market Perform. The broker cited the firm's questioned ability to recover as a reason for the downgrade. The stock is sliding by 6 percent, receding from a fifteen month closing high set last month and falling to a one-month intraday low.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mixed on Thursday. Japan's benchmark Nikkei 225 Index closed down by 0.6 percent, while Hong Kong's Hang Seng Index rose by 1.2 percent.

Meanwhile, the major European markets have turned negative, with the French CAC 40 and the German DAX Index both down by 0.5 percent, while the U.K.'s FTSE 100 is sliding by 0.4 percent.

In the bond markets, treasuries are seeing some weakness after trending higher in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is currently up 3.4 basis points at 3.329 percent.

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