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Stocks Experience Choppy Trading After Dow Reaches New High - U.S. Commentary


With traders expressing some uncertainty about the near-term outlook for the markets, stocks are turning in a relatively lackluster performance in mid-day trading on Wednesday after failing to sustain an early move to the upside.

The major averages have turned mixed on the day, with the Nasdaq slipping into negative territory. The Nasdaq is down 2.10 points or 0.1 percent at 3,222.03, while the Dow is up 27.73 points or 0.2 percent at 14,281.50 and the S&P 500 is up 0.47 points or less than a tenth of a percent at 1,540.26.

The choppy trading on Wall Street comes as traders seem reluctant to make any significant moves after the Dow ended the previous session at a record closing high.

While traders might have been expected to do some profit taking after yesterday's rally, an upbeat employment report has helped to support the markets.

Before the start of trading, payroll processor Automatic Data Processing, Inc. (ADP) released a report showing that private sector employment increased by more than expected in the month of February.

ADP said private sector employment increased by 198,000 jobs in February following an upwardly revised increase of 215,000 jobs in January.

Economists had expected the private sector to add about 173,000 jobs compared to the addition of 192,000 jobs originally reported for the previous month.

Mark Zandi, chief economist of Moody's Analytics, said, "The job market remains sturdy in the face of significant fiscal headwinds."

"Businesses are adding to payrolls more strongly at the start of 2013 with gains across all industries and business sizes," he added. "Tax increases and government spending cuts don't appear to be affecting the job market."

A separate report from the Commerce Department showed a notable decrease in factory orders in the month of January, although the drop was largely due to weakness in the volatile transportation sector.

Later in the day, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Fed districts.

The Beige Book is typically released about two weeks before the next Federal Open Market Committee meeting and could shed some light on the outlook for monetary policy.

Sector News

While many of the major sectors are showing only modest moves in mid-day trading, substantial strength is visible among gold stocks. The NYSE Arca Gold Bugs Index has surged up by 2.5 percent after ending the previous session at its worst closing level in well over three years.

The strength among gold stocks comes amid an increase by the price of the precious metal, with gold for April delivery climbing $4 to $1,578.90 an ounce.

Health insurance stocks have also moved to the upside on the day, resulting in a 1.1 percent gain by the Morgan Stanley Healthcare Payor Index. Molina Healthcare (MOH) and WellCare (WCG) are posting notable gains.

Computer hardware, steel, and banking stocks are also seeing some strength, while weakness has emerged among railroad stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved higher on Wednesday on the heels of the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 2.1 percent, while Hong Kong's Hang Seng Index advanced by 1 percent.

Meanwhile, the major European markets turned mixed over the course of the trading day. While the German DAX Index ended the day up by 0.6 percent, the U.K.'s FTSE 100 Index edged down by 0.1 percent and the French CAC 40 Index fell by 0.4 percent.

In the bond market, treasuries are seeing moderate weakness, extending the downward move seen over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3 basis points at 1.924 percent.

by RTTNews Staff Writer

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