U.S. Stocks Fluctuate But Maintain Positive Bias

After failing to sustain an initial move to the upside, stocks have fluctuated over the course of the trading session on Thursday but largely maintained a positive bias.

The Nasdaq and S&P 500 briefly dipped below the unchanged line in late morning trading but are currently in positive territory.

The Nasdaq is up 99.61 points or 0.6 percent at 16,047.35 and the S&P 500 is up 16.34 points or 0.3 percent at 5,086.10.

Meanwhile, the narrower Dow has spent the day bouncing back and forth across the unchanged line and is currently down 21.83 points or 0.1 percent at 38,927.19.

The early strength on Wall Street came following the release of a highly anticipated Commerce Department showing consumer prices in the U.S. increased in line with economist estimates in the month of January.

The Commerce Department said consumer prices rose by 0.3 percent in January after inching up by a revised 0.1 percent in December.

Economists had expected consumer prices to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.

Excluding food and energy prices, core consumer prices climbed by 0.4 percent in January after edging up by a revised 0.1 percent in December. The increase in core prices also matched estimates.

Meanwhile, the report said the annual rate of consumer price growth slowed to 2.4 percent in January from 2.6 percent in December. The slowdown matched expectations.

The annual rate of core consumer price growth also slowed to 2.8 percent in January from 2.9 percent in December, in line with estimates.

“The report was largely in line with economist estimates, which was seen a relief for investors who were concerned about the potential for hotter than expected inflation to start the year,” said Sam Millette, Director of Fixed Income for Commonwealth Financial Network.

The inflation readings are said to be favored by the Federal Reserve, and the data generated some optimism about the outlook for interest rates.

Buying interest has waned somewhat over the course of the session, however, as there remains some uncertainty about when the Federal Reserve will begin cutting rates.

“The narrative has not changed that the next move by the Fed will be a cut in rates but the persistence of services inflation likely pushes out the timing of that first cut,” said Jeffrey Roach, Chief Economist for LPL Financial.

In other U.S. economic news, the Labor Department released a report showing a bigger than expected increase in weekly jobless claims, while a report from the National Association of Realtors unexpectedly showed a sharp pullback by pending home sales in January.

Sector News

Computer hardware stocks continue to see substantial strength the day, resulting in a 2.9 percent surge by the NYSE Arca Computer Hardware Index.

Pure Storage (PSTG) has helped to lead the sector higher, with the data storage company soaring by 22.7 percent after reporting better than expected fourth quarter results and providing upbeat guidance.

Significant strength also remains visible among gold stocks, as reflected by the 2.6 percent jump by the NYSE Arca Gold Bugs Index. The index is bouncing off its lowest closing level in well over a year amid an increase by the price of gold.

Semiconductor stocks are also turning in a strong performance, driving the Philadelphia Semiconductor Index up by 2.3 percent to a record intraday high.

Housing, commercial real estate and natural gas stocks are also seeing considerable strength, while networking stocks have shown a notable move to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. Japan’s Nikkei 225 Index and Hong Kong’s Hang Seng Index edged down by 0.1 percent and 0.2 percent, respectively, while China’s Shanghai Composite Index surged by 1.9 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index fell by 0.3 percent, the U.K.’s FTSE 100 Index inched up by 0.1 percent and the German DAX Index rose by 0.4 percent.

In the bond market, treasuries have pulled back off their best levels but remain in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.6 basis points at 4.248 percent.

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