Stocks turned in yet another lackluster performance during trading on Wednesday, extending the sideways move seen over the past week. Traders expressed continued uncertainty about the near-term outlook for the markets following the release of a mixed batch of U.S. economic data.
The major averages eventually ended the session mixed for the fifth time in the past six sessions. While the Dow edged down 7.36 points or 0.1 percent to 13,164.78, the Nasdaq rose 13.95 points or 0.5 percent to 3,030.93 and the S&P 500 inched up 1.60 points or 0.1 percent to 1,405.53.
The choppy trading on Wall Street came as traders remained on the sidelines amid the release of several key U.S. economic reports.
While the New York Federal Reserve released a report showing an unexpected contraction in regional manufacturing activity, separate reports showed a bigger than expected increase in industrial production and an unexpected improvement in homebuilder confidence.
The New York Fed said its general business conditions index dropped to a negative 5.9 in August from a positive 7.4 in July, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to show a much more modest decrease to 7.0.
Meanwhile, the Federal Reserve said industrial production increased by 0.6 percent in July compared to economist estimates for an increase of about 0.5 percent. The growth reflected increased output in each of the manufacturing, mining, and utilities sectors.
A separate report released by the National Association of Home Builders showed that its index of homebuilder confidence climbed to 37 in August from 35 in July. The increase came as a surprise to economists, who had expected the index to come in unchanged compared to the previous month.
With the unexpected increase, the homebuilder confidence index rose to its highest level since coming in at 39 in February of 2007.
The Labor Department also released a report showing that consumer prices unexpectedly came in unchanged for the second consecutive month in July.
Among individual stocks, shares of Target (TGT) moved to the upside after the discount retailer reported better than expected second quarter earnings and raised its full-year guidance. Target rose by 1.8 percent on the day.
Apparel retailer Abercrombie & Fitch also turned in a strong performance after reporting second quarter earnings that fell year-over-year but came in above analyst estimates. Shares of Abercrombie & Fitch surged up by 9 percent.
Meanwhile, shares of Deere (DE) tumbled by 6.3 percent after the agricultural equipment giant reported third quarter earnings that increased by less than analysts had expected. The company also lowered its full-year revenue guidance.
Despite the lack of direction shown by the broader markets, health insurance stocks moved sharply higher over the course of the trading day. Reflecting the strength in the health insurance sector, the Morgan Stanley Healthcare Payor Index surged up by 1.8 percent.
Centene (CNC) and Health Net (HNT) turned in two of the health insurance sector's best performances, advancing by 4 percent and 3.7 percent.
Networking stocks also saw considerable strength, regaining some ground after coming under pressure in the previous session. After ending Tuesday's trading down by 2.3 percent, the NYSE Arca Networking Index rose by 1.3 percent
Telecom, biotechnology, and transportation stocks also saw significant strength on the day, while steel stocks came under pressure. The NYSE Arca Steel Index fell by 1.1 percent, pulling back further off last Friday's nearly three-month closing high.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng tumbled by 1.2 percent.
The major European markets also ended the day in the red. While the French CAC 40 Index closed just below the unchanged line, the German DAX Index and U.K.'s FTSE 100 Index fell by 0.4 percent and 0.5 percent, respectively.
In the bond market, treasuries moved sharply lower over the course of the trading day, extending a recent downward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 7.9 basis points to a three-month closing high of 1.805 percent.
Trading on Thursday is likely to be impacted by reaction to quarterly results from networking giant Cisco Systems (CSCO) and retail giant Wal-Mart (WMT).
Cisco released its fourth quarter results after the close of today's trading, while Wal-Mart is due to report its second quarter results before the start of trading on Thursday.
Another batch of key U.S. economic data is also scheduled to be released on Thursday, with traders likely to keep a close eye on reports on weekly jobless claims, housing starts, and Philadelphia-area manufacturing activity.
by RTT Staff Writer
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