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Nasdaq, S&P 500 Regain Ground But Dow Closes Nearly Flat - U.S. Commentary

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Stocks maintained a positive bias for much of the trading session on Wednesday but gave back ground going into the close. The major averages pulled back well off their highs of the session, with the Dow ending the day nearly flat.

After ending the previous session at its lowest closing level in over seven months, the tech-heavy Nasdaq advanced 63.43 points or 0.9 percent to 6,972.25. The S&P 500 also rose 8.04 points or 0.3 percent to 2,649.93, while the Dow edged down by 0.95 points or less than a tenth of a percent to 24,464.69.

The strength seen for most of the day came as traders went bargain hunting following the sell-off seen over the two previous sessions.

Upbeat earnings news from retailers like Foot Locker (FL), BJ's Wholesale (BJ), and Barnes & Noble (BKS) also contributed to the rebound.

Buying interest was relatively subdued, however, as traders digested some disappointing economic data, including a report from the Commerce Department showing a much steeper than expected drop in durable goods orders in October.

The Commerce Department said durable goods orders plunged by 4.4 percent in October following a revised 0.1 percent dip in September.

Economists had expected orders to slump by 2.5 percent compared to the 0.7 percent increase that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders inched up by 0.1 percent in October after a revised 0.6 percent decrease in September.

Ex-transportation orders had been expected to rise by 0.4 percent compared to the 0.1 percent uptick originally reported for the previous month.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly edged higher in the week ended November 17th.

The report said initial jobless claims rose to 224,000, an increase of 3,000 from the previous week's upwardly revised level of 221,000.

Economists had expected jobless claims to slip to 215,000 from the 216,000 originally reported for the previous week.

Meanwhile, the National Association of Realtors released a report showing a bigger than expected rebound in existing home sales in the month of October.

NAR said existing home sales surged up by 1.4 percent to an annual rate of 5.22 million in October after plunging by 3.4 percent to a rate of 5.15 million in September. Economists had expected existing home sales to jump by 1.0 percent.

Sector News

Gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 3 percent.

The strength in the gold sector came amid an increase by the price of the precious metal, with gold for December delivery climbing $6.80 to $1,228 an ounce.

Considerable strength was also visible among energy stocks, which rebounded along with the price of crude oil. After ending Tuesday's trading at its lowest closing level in over a year, crude for January delivery jumped $1.20 to $54.63 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index and the Philadelphia Oil Service Index both spiked by 2.2 percent and the NYSE Arca Natural Gas Index surged up by 2.1 percent.

Software stocks also saw considerable strength on the day, resulting in a 1.7 percent advance by the Dow Jones Software Index.

Design software developer Autodesk (ADSK) posted a standout gain after reporting better than expected third quarter results and providing upbeat guidance for the current quarter.

Steel, transportation, and housing stocks also moved notably higher, while weakness emerged among utilities and tobacco stocks.

Other Markets

In overseas trading stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index climbed by 0.5 percent.

Meanwhile, the major European markets all rebounded following recent weakness. While the French CAC 40 Index jumped by 1 percent, the U.K.'s FTSE 100 Index and the German DAX Index surged up by 1.5 percent and 1.6 percent, respectively.

In the bond market, treasuries gave back ground after trending higher over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.3 basis points to 3.061 percent.

Looking Ahead

Following the Thanksgiving Day holiday on Thursday, trading activity is likely to remain subdued on Friday ahead of an early close on Wall Street. A lack of major U.S. economic news is likely to help keep traders on the sidelines.

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