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Dow Posting Modest Loss In Mid-Day Trading, Nasdaq Sharply Lower

wallstreet sept05 17feb21 lt

Stocks remain mostly lower in mid-day trading on Wednesday after moving to the downside early in the session. The tech-heavy Nasdaq has shown a particularly steep drop on the day, while the Dow is posting a much more modest loss.

After ending the previous session at a record closing high, the Dow is down 36.08 points or 0.1 percent at 31,486.67. Meanwhile, the Nasdaq is down 192.85 points or 1.4 percent at 13,854.65 and the S&P 500 is down 19.65 points or 0.5 percent at 3,912.94.

The weakness on Wall Street comes following the release of a batch of largely upbeat U.S. economic data, which paints a positive picture of the economy but has also added to recent inflation concerns.

Before the start of trading, the Commerce Department released a report showing retail sales rebounded by much more than anticipated in the month of January.

The Commerce Department said retail sales spiked by 5.3 percent in January after sliding by a revised 1.0 percent in December.

Economists had expected retail sales to jump by 1.1 percent compared to the 0.7 percent decrease originally reported for the previous month.

Excluding sales by motor vehicle and parts retailers, retail sales soared by 5.9 percent in January after tumbling by a revised 1.8 percent in December.

Economists had expected ex-auto sales to increase by 1.0 percent compared to the 1.4 percent slump originally reported for the previous month.

The Federal Reserve also released a report showing industrial production increased by more than expected in the month of January.

The Fed said industrial production climbed by 0.9 percent in January after jumping by a downwardly revised 1.3 percent in December.

Economists had expected industrial production to rise by 0.5 percent compared to the 1.6 percent spike originally reported for the previous month.

Adding to inflation concerns, a separate report from the Labor Department showed producer prices jumped by much more than expected in the month of January.

The Labor Department said its producer price index for final demand surged up by 1.3 percent in January after rising by 0.3 percent in December. Economists had expected producer prices to increase by 0.4 percent.

Excluding food and energy prices, core producer prices still shot up by 1.2 percent in January after inching up by 0.1 percent in December. Core prices were expected to edge up by 0.2 percent.

The report also showed the annual rate of producer price growth soared to 1.7 percent in January from 0.8 percent in December.

Core producer prices were up by 2.0 percent year-over-year in January, reflecting a notable acceleration from the 1.2 percent increase seen in the previous month.

"The modest year-on-year increases, despite big month-on-month increases, suggest this is reflation, not inflation," said Chris Low, Chief Economist at FHN Financial. "That is, prices are rising after falling earlier."

"Some further increases in the PPI are likely given commodity price behavior in recent weeks," he added. "These will boost the PPI and — to a much lesser extent — the CPI in the months ahead."

In addition to the inflation concerns, traders may also be worried the upbeat data will reduce the pressure on lawmakers to pass additional stimulus.

Meanwhile, notable gains by Chevron (CVX) and Verizon (VZ) have helped limit the downside for the Dow after Warren Buffett's Berkshire Hathaway revealed increased stakes in the blue chip stocks.

Sector News

Semiconductor stocks have moved sharply lower over the course of the session, with the Philadelphia Semiconductor Index tumbling by 2.9 percent after ending the previous session at a record closing high.

Substantial weakness is also visible among gold stocks, resulting in a 2.7 percent nosedive by the NYSE Arca Gold Bugs Index. The index has fallen to its lowest intraday level in eight months.

The continued weakness among gold stocks comes amid another steep drop by the price of the precious metal, as gold for April delivery is plunging $25.70 to $1,773.30 an ounce.

Networking stocks are also seeing considerable weakness in mid-day trading, dragging the NYSE Arca Networking Index down by 2.2 percent.

Oil service, computer hardware and transportation stocks have also shown notable moves to the downside, while airline stocks are bucking the downtrend.

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 slid by 0.6 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index slumped by 1.1 percent, the U.K.'s FTSE 100 Index fell by 0.6 percent and the French CAC 40 Index dipped by 0.4 percent.

In the bond market, treasuries have turned higher over the course of the session after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.2 basis points at 1.277 percent.

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