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Stocks Showing A Lack Of Direction On Mixed Earnings News - U.S. Commentary

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After failing to sustain an initial move to the upside, stocks have shown a lack of direction over the course of morning trading on Wednesday. The major averages have spent the morning bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 12.47 points or 0.2 percent at 8,012.70, the Dow is down 21.73 points or 0.1 percent at 26,430.93 and the S&P 500 is down 0.56 points or less than a tenth of a percent at 2,906.50.

The choppy trading on Wall Street comes as traders digest a mixed batch of earnings news from big-name companies such as PepsiCo (PEP), Morgan Stanley (MS), Netflix (NFLX) and IBM Corp. (IBM).

PepsiCo and Morgan Stanley are posting notable gains after reporting quarterly results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, Netflix and IBM have moved to the downside after both reported better than expected earnings but on weaker than expected revenues and provided disappointing guidance.

Traders may also be reluctant to make more significant moves ahead of this afternoon's release of the Federal Reserve's Beige Book.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, may she additional light on the outlook for interest rates.

On the U.S. economic front, a report released by the Commerce Department showed the U.S. trade deficit unexpectedly narrowed in the month of February amid a jump in the value of exports.

The Commerce Department said the trade deficit narrowed to $49.4 billion in February from $51.1 billion in January, while economists had expected the deficit to widen to $53.5 billion.

While many of the major sectors are showing only modest moves, semiconductor stocks are showing another substantial move to the upside. The Philadelphia Semiconductor Index has surged up by 1.9 percent to a record intraday high.

Communications chip maker Qualcomm (QCOM) continues to lead the sector higher, soaring by 12.5 percent after settling a royalty dispute with Apple (AAPL).

On the other hand, biotechnology stocks have moved sharply lower in morning trading, dragging the NYSE Arca Biotechnology Index down by 3.3 percent to a two-month intraday low.

Healthcare, pharmaceutical, and telecom stocks are also seeing notable weakness, with Sprint (S) and T-Mobile (TMUS) leading the telecom sector lower amid concerns about approval of their planned merger.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.3 percent, while Australia's S&P/ASX 200 Index dropped by 0.3 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.'s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index and the German DAX Index are both up by 0.6 percent.

In the bond market, treasuries are showing a lack of direction after trending lower over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.596 percent.

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