US Market-Stocks Mostly Lower Following Mixed Batch Of Economic Data

Stocks are mostly on the downside in mid-morning trading on Friday amid reaction to a mixed batch of economic data and light trading ahead of the holiday weekend. The major averages are all in negative territory by modest margins, partly offsetting yesterday's strong gains.

On the economic front, Reuters and the University of Michigan released their final report on consumer sentiment in the month of May, showing an unexpected upward revision to their consumer sentiment index for the month.

The consumer sentiment index for May was upwardly revised to a reading of 73.6 from the mid-month reading of 73.3. The upward revision, which pushed the index well above the final April reading of 72.2, came as a surprise to economists, who had expected the index to be downwardly revised to 73.2.

The Institute for Supply Management - Chicago released a separate report showing that manufacturing activity in the Chicago-area expanded for the eight consecutive month in May, although the pace of growth showed a notable slowdown compared to the previous month.

The ISM Chicago said its index of regional manufacturing activity fell to 59.7 in May from 63.8 in April, but a reading above 50 indicates continued growth in the sector. Economists had expected the index to slip to a reading of 60.0.

Before the opening bell, the Commerce Department reported that personal income increased by 0.4 percent in April, matching the upwardly revised increase seen in the previous month. Economists had expected income to increase by 0.4 percent compared to the 0.3 percent growth originally reported for March.

On the other hand, the Commerce Department also said that personal spending came in unchanged in April after surging up by 0.6 percent in March. The lack of growth came as a surprise to economists, who had expected spending to increase by 0.3 percent.

On the corporate front, BP Plc (BP) is continuing its "top-kill" measure to plug the leaking oil well in the Gulf of Mexico, with disaster costs eclipsing the $900 million mark thus far.

Royal Dutch Shell Plc (RDS-A) also announced that it has agreed to buy East Resources Inc., a privately-held U.S. natural-gas explorer, for $4.7 billion in cash.

The major averages have all seen choppy movement in recent dealing, looking for direction since coming off of their session lows. The Dow is down 33.33 points or 0.3 percent at 10,225.66, theNasdaq is down 4.44 points or 0.2 percent at 2,273.24 and the S&P 500 is down 2.78 points or 0.3 percent at 1,100.28.

Sector News

Oil service stocks are some of the morning's weakest performers, with the Philadelphia Oil Service Sector Index slipping by 3.3 percent, offsetting some of yesterday's advance.

The weakness among oil service stocks may be partly due to President Barack Obama's announcement on Thursday that his administration is extending a moratorium on new deepwater drilling due to the massive oil spill in the Gulf of Mexico

Tobacco stocks are also markedly lower, driving the NYSE Arca Tobacco Index down by 1.9 percent. Shares of Universal (UVV) are leading the sector lower, sliding by 9.9 percent to their lowest intraday price in nearly seven months.

Semiconductor, networking and banking stocks are also moving lower, while modest strength among natural gas and utility stocks is helping to soften the losses by the broader markets.

Stocks Driven By Analyst Comments

Despite the weakness in the broader markets, Ulta Salon (ULTA) is moving notably higher after being upgraded by Robert W. Baird from Neutral to Outperform. The stock has gained 4.8 percent, jumping to a two and a half year intraday high.

On the other hand, JA Solar Holdings Co. (JASO) is under pressure after analysts at Barclays Capital downgraded the stock to Equal Weight from Overweight. Shares are down by 3.3 percent, heading back towards Tuesday's two-month closing low.