With traders waiting on the Federal Reserve's monetary policy announcement, stocks are turning in a lackluster performance during trading on Wednesday. The markets have turned mixed on the day after failing to sustain an initial upward move.
The major averages have moved roughly sideways in recent trading, stuck on opposite sides of the unchanged line. While the Nasdaq is down 4.82 points or 0.2 percent at 2,934.70, the Dow is up 34.02 points or 0.3 percent at 13,042.70 and the S&P 500 is up 2.80 points or 0.2 percent at 1,382.12.
The early strength on Wall Street was partly due to the release of a report from payroll processor Automatic Data Processing, Inc. (ADP) showing much stronger than expected U.S. private sector job growth in the month of July.
ADP said the private sector added 163,000 jobs in July following a downwardly revised increase of 172,000 jobs in June. Economists had expected an increase of about 120,000 jobs compared to the increase of 176,000 jobs originally reported for the previous month.
Nonetheless, buying interest waned not long after the open as traders were reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement this afternoon.
A disappointing report on U.S. manufacturing activity also helped to limit the upside for the markets, with the Institute for Supply Management showing that its manufacturing index continued to indicate a contraction in July.
While the ISM said its manufacturing index inched up to 49.8 in July from 49.7 in June, a reading below 50 indicates a contraction in manufacturing activity. Economists had been expecting the index to climb to a reading of 50.2.
The choppy trading seen throughout the session since then comes as traders wait on the statement from the Fed, hoping for an indication about the possibility of further stimulus.
The markets are likely to see considerable volatility following the release of the statement from the Fed, although some traders may remain on the sidelines ahead of a separate monetary policy announcement from the European Central Bank on Thursday.
Despite the lackluster performance by the broader markets, trucking stocks have moved sharply lower over the course of the trading day, dragging the Dow Jones Trucking Index down by 3.3 percent. With the loss, the index is on pace to end the day at a nearly ten-month closing low.
Con-Way (CNW) has helped to lead the trucking sector lower, tumbling by 15.1 percent after reporting weaker than expected second quarter earnings. Arkansas Best (ABFS) is also posting a steep loss.
Significant weakness has also emerged among electronic storage stocks, as reflected by the 1.7 percent loss being posted by the NYSE Arca Disk Drive Index. Quantum (QTM) is turning in one of the storage sector's worst performances despite reporting first quarter results that matched analyst estimates.
Brokerage, airline, and gold stocks have also moved to the downside on the day, with gold stocks moving lower along with the price of the precious metal.
Meanwhile, health insurance, steel, and oil service stocks continue to see some strength on the day. An increase by the price of crude oil is contributing to the strength among oil service stocks.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. While Japan's Nikkei 225 Index ended the day down by 0.6 percent, Hong Kong's Hang Seng Index edged up by 0.1 percent.
The major European markets also ended the day mixed. While the German DAX Index fell by 0.3 percent, the French CAC 40 Index rose by 0.9 percent and the U.K.'s FTSE 100 Index surged up by 1.4 percent.
In the bond market, treasuries continued to see modest weakness ahead of the Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.7 basis points at 1.509 percent.
by RTT Staff Writer
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