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U.S. Stocks Finish Lackluster Session Modestly Lower

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Following the rally seen in the previous session, stocks showed a lack of direction over the course of the trading day on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the major averages finished the day modestly lower. The Dow edged down 22.82 points or 0.1 percent to 27,001.98, the Nasdaq dipped 24.52 points or 0.3 percent to 8,124.18 and the S&P 500 slipped 5.99 points or 0.2 percent to 2,989.69.

The choppy trading on Wall Street came as traders digested mixed U.S. economic data as well as the latest batch of earnings news.

Before the start of trading, the Commerce Department released a report showing an unexpected decrease in U.S. retail sales in the month of September.

The Commerce Department said retail sales fell by 0.3 percent in September after climbing by an upwardly revised 0.6 percent in August.

The drop came as a surprise to economists, who had expected sales to rise by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Excluding a notable pullback in auto sales, retail sales still edged down by 0.1 percent in September after rising by a revised 0.2 percent in August.

Economists had expected ex-auto sales to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

The drop in retail sales raised some concerns about the economic outlook but also added to optimism about further interest rate cuts by the Federal Reserve.

Meanwhile, the National Association of Home Builders released a separate report showing homebuilder confidence unexpectedly climbed to its highest level in well over a year in the month of October.

The report said the NAHB/Wells Fargo Housing Market Index jumped to 71 in October after inching up to 68 in September. Economists had expected the index to come in unchanged from the previous month.

With the unexpected increase, the housing market index rose for the fourth straight month and reached its highest level since hitting a matching reading in February of 2018.

Later in the day, the Federal Reserve released its Beige Book, which said the U.S. economy expanded at only a slight to modest pace over the past month.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, noted business activity varied across the country.

Traders were also reacting to the latest batch of earnings news, with Bank of America (BAC) moving notably higher after reporting better than expected third quarter results.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster performance by the broader markets.

Steel stocks showed a significant move to the downside, however, with the NYSE Arca Steel Index slumping by 2 percent amid renewed uncertainty about a U.S.-China trade deal.

Software and semiconductor stocks also saw considerable weakness, dragging the Dow Jones U.S. Software Index and the Philadelphia Semiconductor Index down by 1.7 percent and 1.5 percent, respectively.

On the other hand, gold stocks moved sharply higher over the course of the session, resulting in a 1.8 percent jump by the NYSE Arca Gold Bugs Index.

The rally by gold stocks came amid a notable increase by the price of the precious metal, with gold for December delivery climbing $10.50 to$1,494 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 1.2 percent, while Hong Kong's Hang Seng Index climbed by 0.6 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index rose by 0.3 percent, the French CAC 40 Index edged down by 0.1 percent and the U.K.'s FTSE 100 Index fell by 0.6 percent.

In the bond market, treasuries saw some strength following the downturn seen over the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.3 basis points to 1.748 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to another batch of economic news, with reports on weekly jobless claims, housing starts, and industrial production likely to attract attention.

On the earnings front, Alcoa (AA), CSX Corp. (CSX), IBM Corp. (IBM) and Netflix (NFLX) are among the companies releasing their quarterly results after the close of today's trading.

Ericsson (ERIC), Honeywell (HON), KeyCorp (KEY), Morgan Stanley (MS), Philip Morris (PM) and Union Pacific (UNP) are also among the companies due to report their results before the start of trading on Thursday.

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