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U.S. Stocks Move Mostly Lower Amid Rebound By Bond Yields

wallstreet sept12 03mar21 lt

Stocks have moved mostly lower over the course of morning trading on Wednesday, extending the pullback seen in the previous session. While the Dow has been bouncing back and forth across the unchanged line, the broader Nasdaq and S&P 500 have slid firmly into negative territory.

Currently, the Dow is posting a modest gain, up 50.47 points or 0.2 percent at 31,441.99. Meanwhile, the Nasdaq is down 176.44 points or 1.3 percent at 13,182.35 and the S&P 500 is down 19.64 points or 0.5 percent at 3,850.65.

The continued weakness on Wall Street comes amid a rebound by treasury yields, with the yield on the benchmark ten-year note jumping after moving lower over the three previous sessions.

Yields remain well off the highs set last week, but the increase has still led to renewed concerns about the outlook for interest rates and inflation.

Negative sentiment may also have been generated in reaction to a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of February.

ADP said private sector employment rose by 117,000 jobs in February after climbing by an upwardly revised 195,000 jobs in January.

Economists had expected employment to increase by 177,000 jobs compared to the addition of 174,000 jobs originally reported for the previous month.

"The labor market continues to post a sluggish recovery across the board," said Nela Richardson, ADP's chief economist. "We're seeing large-sized companies increasingly feeling the effects of COVID-19, while job growth in the goods producing sector pauses."

She added "With the pandemic still in the driver's seat, the service sector remains well below its pre-pandemic levels; however, this sector is one that will likely benefit the most over time with reopenings and increased consumer confidence."

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

The Institute for Supply Management also released a report showing a slowdown in the pace of growth in U.S. service sector activity in the month of February

The ISM said its services PMI dropped to 55.3 in February from 58.7 in January, although a reading above 50 still indicates growth in the sector. Economists had expected the index to come in unchanged.

The pullback by the services PMI came after the index reached its highest level since hitting 58.8 in February of 2019.

Earlier, the markets seemed poised to benefit from optimism about the coronavirus vaccine rollouts after President Joe Biden said Tuesday the U.S. will have enough vaccine supply for every adult in America by the end of May.

Biden cited the emergency use authorization issued for Johnson & Johnson's (JNJ) vaccine as well as a collaboration between J&J and Merck (MRK) to expand production of the single-dose vaccine.

"When I came into office, the prior administration had contracted for not nearly enough vaccine to cover adults in America. We rectified that," Biden said. "About three weeks ago, we were able to say that we'll have enough vaccine supply for adults by the end of July.

He added, "And I'm pleased to announce today, as a consequence of the stepped-up process that I've ordered and just outlined, this country will have enough vaccine supply — I'll say it again — for every adult in America by the end of May. By the end of May. That's progress — important progress."

Gold stocks have moved sharply lower after bucking the downtrend seen in the previous session, dragging the NYSE Arca Gold Bugs Index down by 3.7 percent.

The pullback by gold stocks comes amid a steep drop by the price of the precious metal, with gold for April delivery tumbling $24.70 to $1,708.90 an ounce.

Considerable weakness has also emerged among biotechnology stocks, as reflected by the 2.8 percent slump by the NYSE Arca Biotechnology Index. The index has fallen to its lowest intraday level in nearly three months.

Software, housing and retail stocks are also seeing notable weakness in morning trading, while energy stocks have moved sharply higher amid a jump by the price of crude oil.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.5 percent, while China's Shanghai Composite Index surged up by 2 percent.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.'s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index is down by 0.3 percent and the German DAX Index is down by 0.4 percent.

In the bond market, treasuries are giving back ground after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.8 basis points at 1.483 percent.

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