U.S. Stocks Give Back Ground After Early Advance But Remain Mostly Positive

After moving to the upside early in the session, stocks have given back some ground over the course of the trading day on Thursday but remain mostly positive.

Currently, the Nasdaq is up 71.39 points or 0.5 percent at 16,019.13 and the S&P 500 is up 13.40 points or 0.3 percent at 5,083.16.

The narrower Dow has bounced back and forth across the unchanged line but is also currently up 27.52 points or 0.1 percent at 38,976.54.

The early strength on Wall Street came following the release of a highly anticipated Commerce Department report 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 have shown a substantial move to the upside on the day, resulting in a 2.7 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 21.4 percent after reporting better than expected fourth quarter results and providing upbeat guidance.

Significant strength is also visible among gold stocks, as reflected by the 2.3 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, natural gas and oil service stocks are also seeing considerable strength, while networking and pharmaceutical stocks have moved 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 have also turned mixed on the day. While the French CAC 40 Index is down by 0.2 percent, the U.K.’s FTSE 100 Index is up by 0.3 percent and the German DAX Index is up by 0.6 percent.

In the bond market, treasuries have moved to the upside after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.9 basis points at 4.235 percent.

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