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Stocks Continue To Turn In Mixed Performance - U.S. Commentary

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Following the sell-off seen in the previous session, the major averages are turning in a mixed performance in mid-day trading on Wednesday. While the tech-heavy Nasdaq has dipped into positive territory, the Dow and the S&P 500 are holding on to modest gains.

Currently, the major averages remain on opposite sides of the unchanged line. The Nasdaq is down 5.77 points or 0.1 percent at 6,369.81, while the Dow is up 47.79 points or 0.2 percent at 21,801.10 and the S&P 500 is up 3.32 points or 0.1 percent at 2,461.17.

Bargain hunting contributed to initial strength on Wall Street after the steep drop seen on Tuesday, which reflected geopolitical concerns on the heels of North Korea's latest nuclear test.

However, traders seemed reluctant to make significant moves amid uncertainty ahead of the European Central Bank's monetary policy meeting on Thursday.

Early trading may also have been impacted by news that Federal Reserve Vice Chairman has submitted his resignation, effective on or around October 13th.

On the U.S. economic front, the Institute for Supply Management released a report showing a rebound in the pace of growth in service sector activity in the month of August.

The ISM said its non-manufacturing index climbed to 55.3 in August after falling to 53.9 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to rebound to 55.8.

A separate report released by the Commerce Department showed the trade deficit came in slightly wider in the month of July.

The Commerce Department said the trade deficit widened to $43.7 billion in July from a revised $43.5 billion in June. Economists had expected the deficit to widen to $44.6 billion.

Sector News

Railroad stocks continue to see considerable strength in mid-day trading, with the Dow Jones Railroads Index jumping by 2.1 percent. The index reached its best intraday level in well over a month earlier in the session.

CSX Corp. (CSX) has helped to lead the railroad sector higher after reporting very good progress in transitioning its operating model to precision scheduled railroading.

Significant strength is also visible among energy stocks, which are moving higher along with the price of crude oil. Crude for October delivery is climbing $0.52 to $49.18 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 1.8 percent, while the NYSE Arca Natural Gas Index and the NYSE Arca Oil & Gas Index are up by 1.5 percent and 1.3 percent, respectively.

On the other hand, brokerage and biotechnology stocks are seeing some weakness, partly offsetting the strength in the aforementioned sectors.

Other Markets

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 Index fell by 0.5 percent.

Meanwhile, the major European markets turned in another mixed performance on the day. While the U.K.'s FTSE 100 Index dipped by 0.3 percent, the French CAC 40 Index rose by 0.3 percent and the German DAX Index climbed by 0.8 percent.

In the bond market, treasuries are showing a lack of direction following the rally seen 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 2.067 percent.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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