(RTTNews) - Stocks continue to show a lack of direction in mid-afternoon trading on Friday, as subdued volume going into the long weekend is resulting in considerable volatility as investors respond to a mixed bag of corporate and economic news.

In an interview with RTT News, Lou Brien, market strategist at DRW Trading in Chicago, said larger judgments should not be made about Thursday’s comeback because the market is set to eventually head lower.

“I can’t join with the optimists because I do think we have not yet seen the lows,” Brien said. He predicted that the S&P could test the 600 level and believes the turnaround story is “at least a year away.”

Brien also addressed the impact of the stimulus and financial rescue plans, saying, “Although the economy and the banks will be better off with these plans than without them, I don’t think that either one of them will actually turn things…The problems in the economy are just a lot larger than the proposals that we’ve seen so far.”

Shortly after the opening bell, Reuters and the University of Michigan said their consumer sentiment index fell to a reading of 56.2 in February from a reading of 61.2 in January. Economists had been expecting a more modest decrease by the index to a reading of about 60.2.

Meanwhile, mass layoff events showed a substantial increase in the fourth quarter of 2008, according to a report released by the Labor Department, with both layoff events and separations reaching their highest levels on record.

On the corporate front, PepsiCo (PEP) reported quarterly results on Thursday that included an adjusted earnings figure that rose year-over-year and came in line with expectations. The company also said that it expects moderate earnings and revenue growth for full-year 2009.

In other news, President Obama addressed the Business Council at the White House, saying that the long-term recovery would take “years, not months.” As he spoke, Obama pressed for bold action and assistance from the business community.

“Many of your businesses are under tremendous pressure, with revenues falling and credit drying up,” Obama said. “You are feeling directly or indirectly the reverberations of a financial crisis which has upended this economy.”

Obama said his administration would be looking to the business community “for your help not only crafting the policies of the 21st century, but crafting a government for the 21st century.”

The major averages are currently turning in a mixed performance, with the tech-heavy Nasdaq posting a modest gain. While the Nasdaq is up 4.52 at 1,546.23, the Dow is down 11.70 at 7,921.06 and the S&P 500 is down 0.41 at 834.78.

Dow Components

The Dow components are turning in a roughly mixed performance, contributing to the lack of direction being shown by the blue chip index. Nonetheless, notable losses by some of the Dow components are contributing to the loss currently being shown.

One of the worst performances is being shown by Wal-Mart (WMT), which is posting a loss of 3.1 percent on the day. With the decline, the stock is dropping back towards the more than one-year closing low it hit earlier in the month.

The decline is partly due to predictions of weak fourth quarter results out of the retail sector as a whole. The industry is releasing reports that show the seventh consecutive quarter of profit declines. Stores are reducing inventory and prices as shoppers cut their spending to save money.

Other significant losses are also being shown by General Motors (GM), JP Morgan (JPM), and Home Depot (HD), which are posting losses of 4.9 percent, 3.3 percent, and 2.5 percent, respectively.

Meanwhile, Hewlett-Packard (HPQ) is leading the advancing stocks within the blue chip average. The stock is currently up 2 percent on the day.

Boeing (BA) and United Technologies (UTX) are also posting notable gains for the session. Boeing is up 1.9 percent, while United Technologies is up 1 percent.

Sector News

The uncertainty in the broader markets is also driving major sectors to move in opposite directions.

On the upside, defense stocks are turning in some of the best performances of the day, with the Philadelphia Defense Index up 3 percent.

Within the index, GenCorp Inc. (GY) is posting one of the biggest gains of the day, up 35 percent on the session. With the advance, the stock has risen to a level that, if closed at, would mark its highest closing level in over a month.

Additionally, semiconductor, steel, and natural gas stocks are also posting notable gains on the day. The Philadelphia Semiconductor Index is up 1.7 percent, while the Amex Steel and Amex Natural Gas Indices are up 1.8 percent and 1.6 percent, respectively.

At the other end of the spectrum, banking and real estate stocks continue to post some of the day’s widest losses, with the Kbw Bank Index down 3.3 percent and the Morgan Stanley REIT Index down 3.1 percent.

Gold stocks are also posting notable losses on the day as the price of the precious metal fell $7 to $942.20 an ounce. Subsequently, the Amex Gold Bugs Index is down 1.5 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Friday, bouncing back to the upside after seeing notable weakness in the previous session. Japan’s benchmark Nikkei 225 Index closed up 1 percent.

Meanwhile, the major European markets closed mixed after showing some uncertainty near the end of the trading day. The French CAC 40 Index rose 1.1 percent and the German DAX Index edged up 0.1 percent, while the U.K.’s FTSE 100 Index ended the session with a loss of 0.3 percent.

In the bond market, treasuries closed early ahead of the long weekend, ending the session near their lows of the day. Subsequently, the yield on the benchmark ten-year note closed up 15.5 basis points at 2.882 percent.

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Posted in Categories: Economy, Eurozone, Japan, Releases, UK, USA.

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