Stocks moved to the downside at the start of trading on Wednesday, giving back some ground after moving mostly higher over the course of the three previous sessions. The major averages slipped into negative territory but have not seen much follow-through on the initial downward move.
The major averages have bounced off their lows for the young session but currently remain in the red. The Dow is down 15.22 points or 0.1 percent at 13,153.38, the Nasdaq is down 8.81 points or 0.3 percent at 3,007.05 and the S&P 500 is down 2.78 points or 0.2 percent at 1,398.57.
The early weakness on Wall Street is partly due to profit taking, with some traders cashing in on the recent strength in the markets.
The recent gains by stocks drove the major averages to three-month closing highs, with the Nasdaq and the S&P 500 climbing back above the key psychological levels of 3,000 and 1,400, respectively.
Additionally, while optimism about the possibility of further monetary stimulus contributed to the recent strength on Wall Street, Dallas Federal Reserve President Richard Fisher put a damper on those hopes in an interview with Bloomberg.
Fisher suggested that the Fed has done its job regarding providing the necessary economic stimulus and said that it is now up to the private sector. He also said that Congress needs to address the fiscal policy uncertainty in order for the liquidity in the system to be put to work.
The remarks from Fisher are in stark contrast to comments by Boston Fed President Eric Rosengren, who called for an "open-ended" quantitative easing program to boost economic growth during an interview with CNBC on Tuesday.
Peter Boockvar, managing director at Miller Tabak, said, "Fisher is a non-voting member as well as Rosengren. As most of the voting members on the FOMC are uber-doves though, we can assume the argument of more easing will likely carry the day on September 13th."
Electronic storage stocks have shown a notable downward move in early trading, dragging the NYSE Arca Disk Drive Index down by 1.2 percent. STEC Inc. (STEC) has helped to lead the sector lower after reporting a wider than expected second quarter loss and providing disappointing guidance.
Commercial real estate, internet, and utilities stocks are also seeing moderate weakness, although selling pressure remains subdued. On the other hand, airline stocks are seeing considerable strength, moving higher along with gold and steel stocks.
Among individual stocks, Disney (DIS) is trading modestly higher after reporting its fiscal third quarter results after the close of trading on Tuesday. The entertainment giant reported better than expected earnings but on revenues that came in below estimates.
Shares of McDonald's (MCD) have come under pressure after the fast food giant reported global comparable sales that were flat in July compared to expectations for an increase in excess of 2 percent.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. Japan's Nikkei 225 Index rose by 0.9 percent, while China's Shanghai Composite Index edged up by 0.2 percent. However, Hong Kong's Hang Seng bucked the uptrend and closed just below the unchanged line.
Meanwhile, the major European markets have all moved to the downside on the day, partly offsetting their recent gains. While the U.K.'s FTSE 100 Index is down by 0.3 percent, the German DAX Index is down by 0.5 percent and the French CAC 40 Index is down by 0.8 percent.
In the bond market, treasuries are showing a lack of direction after coming under pressure in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.62 percent.
by RTT Staff Writer
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