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U.S. Stocks Pull Back Off Early Highs To Close Little Changed

wallst 032918 22jan20 lt

Stocks moved higher in early trading on Wednesday but gave back ground over the course of the session to end the day little changed. The Nasdaq and the S&P 500 reached new record intraday highs before pulling back near the unchanged line.

The major averages eventually finished the session mixed. While the Dow edged down 9.77 points or less than a tenth of a percent to 29,186.27, the Nasdaq inched up 12.96 points or 0.1 percent to 9,383.77 and the S&P 500 crept up 0.96 points or less than a tenth of a percent to 3,321.75.

A positive reaction to earnings news from IBM Corp. (IBM) contributed to the early strength on Wall Street, with the tech giant jumping by 3.4 percent.

The advance by IBM came after the company reported better than expected fourth quarter results and provided upbeat full-year 2020 guidance.

Positive sentiment was also generated in reaction to news of the Chinese government's efforts to stop the spread of the Wuhan coronavirus outbreak.

Chinese health officials told the Wall Street Journal that hospitals are stepping up preventive measures and government officials are recommending that people not enter or leave Wuhan.

Buying interest waned as the day progressed, however, with traders seemingly reluctant to make significant moves ahead of earnings news from a slew of other big-name companies in the coming days.

Meanwhile, traders largely shrugged off a report from the National Association of Realtors showing U.S. existing home sales rebounded by much more than anticipated in the month of December.

NAR said existing home sales spiked by 3.6 percent to an annual rate of 5.54 million in December after tumbling by 1.7 percent to a rate of 5.35 million in November. Economists had expected existing home sales to jump by 1.2 percent to an annual rate of 5.43 million.

With the much bigger than expected monthly increase, existing home sales in December were up by 10.8 percent compared to the same month a year ago.

On a full-year basis, NAR said total existing home sales came in at 5.34 million in 2019, unchanged from the previous year.

Sector News

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

Natural gas stocks showed a significant move to the downside, however, with the sector extending the sell-off seen in the previous session. The NYSE Arca Natural Gas Index fell by 1.7 percent to its lowest closing level in over a month.

The continued weakness among natural gas stocks came even though the price of the commodity regained some ground following the nosedive seen on Tuesday.

Considerable weakness also emerged among oil service stocks, as reflected by the 1.5 percent loss posted by the Philadelphia Oil Service Index. A steep drop by the price of crude oil weighed on the sector, with crude for March delivery tumbling $1.64 to $56.74 a barrel.

On the other hand, steel stocks regained some ground after falling sharply in the previous session, driving the NYSE Arca Steel Index up by 1.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index climbed by 0.7 percent, while Hong Kong's Hang Seng Index surged up by 1.3 percent.

Meanwhile, the major European markets moved to the downside over the course of the session. While the German DAX Index fell by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index slid by 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries showed a lack of direction following the notable advance seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 1.769 percent.

Looking Ahead

Earnings news may continue to drive the markets on Wednesday, with American Airlines (AAL), Comcast (CMCSA), Procter & Gamble (PG), and Travelers (TRV) among the companies due to report their quarterly results before the start of trading.

Significant news on the earnings front is likely to overshadow U.S. reports on weekly jobless claims and leading economic indicators.

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