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Stocks Moving Mostly Lower In Mid-Day Trading - U.S. Commentary

After showing a lack of direction earlier in the session, stocks have moved mostly lower over the course of the trading day on Wednesday. Lingering concerns about Europe have helped to drag the markets lower, although selling pressure remains relatively subdued.

The major averages have edged up off their new lows for the session in the past few minutes but remain in the red. The Dow is down 42.72 points or 0.3 percent at 12,922.97, the Nasdaq is down 14.90 points or 0.5 percent at 2,933.67 and the S&P 500 is down 5.56 points or 0.4 percent at 1,356.65.

The weakness that has emerged on Wall Street is partly due to the release of some disappointing European economic data, which has led to renewed concerns about a recession in the eurozone.

The report from Markit Economics revealed that private sector activity in the eurozone contracted in February, with the corresponding composite output index dipping below the '50' cut-off mark to 49.7.

A separate report showing the fourth consecutive monthly contraction in Chinese manufacturing activity has also generated some negative sentiment.

Traders are also reacting to news that Fitch Ratings downgraded Greece's credit rating to 'C' from 'CCC' following yesterday's Eurozone agreement on a second bailout for the country. Fitch said a default is highly likely in the near term.

Disappointing earnings news has also contributed to the pullback by stocks, with shares of Dell (DELL) down by 6.4 percent after the computer maker reported weaker than expected fourth quarter earnings.

After the close of trading on Tuesday, Dell reported fourth quarter adjusted earnings of $0.51 per share, a penny below analyst estimates. The company also issued disappointing revenue growth guidance for the first quarter.

Luxury homebuilder Toll Brothers (TOL) is also under pressure after reporting a first quarter loss of $0.02 per share compared to analyst estimates for a profit of $0.02 per share. The company also reported weaker than expected revenues.

Meanwhile, Brocade (BRCD) is up by 4.7 percent after reporting better than expected first quarter earnings and issuing in-line guidance for its second quarter.

In U.S. economic news, the National Association of Realtors released a report showing a notable increase in existing home sales in the month of January, although the report also showed a significant downward revision to the data for December.

Sector News

Banking stocks have shown a notable move to the downside over the course of the trading day, dragging the KBW Bank Index down by 1.6 percent. With the loss, the index is pulling back further off the six-month intraday high it set during trading on Tuesday.

Zions Bancorp (ZION) and Comerica (CMA) are turning in two of the banking sector's worst performances, falling by 3.4 percent and 3.1 percent, respectively.

Significant weakness has also emerged among networking stocks, as reflected by the 1.5 percent loss being posted by the NYSE Arca Networking Index. Alcatel-Lucent (ALU) and Acme Packet (APKT) are posting notable losses.

Housing, computer hardware, and steel stocks are also seeing considerable weakness in mid-day trading, although selling pressure is somewhat subdued.

On the other hand, oil service stocks have shown a strong move to the upside on the day, driving the Philadelphia Oil Service Index up by 1.5 percent. Earlier in the session, the index reached its best intraday level in well over six months.

The strength among oil service stocks comes even though the price of crude oil is giving back some ground after surging up to a nine-month closing high on Tuesday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index advanced by 1 percent, while Hong Kong's Hang Seng Index ended the day up by 0.3 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index edged down by 0.2 percent, the French CAC 40 Index fell by 0.5 percent, and the German DAX Index slid 0.9 percent.

In the bond market, treasuries are moving higher after trending lower over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.3 basis points at 2.012 percent.

by RTT Staff Writer

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