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Nasdaq Posting Steep Loss In Mid-Day Trading But Dow Moving Higher

wallstreet july27 17mar21 lt

U.S. stocks are mostly lower in mid-day trading on Wednesday, weighing on the Nasdaq and the S&P 500. However, the narrower Dow has bucked the downtrend amid strong gains by Dow Inc. (DOW) and Caterpillar (CAT).

Currently, the major averages are turning in a mixed performance. While the Dow is up 104.28 points or 0.3 percent at 32,930.23, the Nasdaq is down 174.95 points or 1.3 percent at 13,296.62 and the S&P 500 is down 18.69 points or 0.5 percent at 3,944.02.

The mixed performance on Wall Street comes as traders express some uncertainty ahead of the Fed's monetary policy announcement this afternoon.

The Fed is widely expected to maintain its ultra-easy money policy, but traders will be paying close attention to the central bank's updated forecasts for the economy, inflation and interest rates.

Some traders are also hoping Fed Chair Jerome Powell will address the recent spike in treasury yields in his post-meeting press conference.

Treasury yields have shown a notable move to the upside ahead of the Fed announcement, contributing to weakness in the technology sector and the steep drop by the tech-heavy Nasdaq.

The yields on ten-year notes and thirty-year bonds have jumped to their highest intraday levels in over a year, raising concerns about the outlook for interest rates.

In U.S. economic news, the Commerce Department released a report showing a substantial decrease in new residential construction in the month of February.

The report said housing starts plummeted by 10.3 percent to an annual rate of 1.421 million in February after slumping by 5.1 percent to a revised rate of 1.584 million in January.

Economists had expected housing starts to decrease by 0.9 percent to a rate of 1.565 million from the 1.580 million originally reported for the previous month.

With the steep drop, housing starts continued to give back ground after reaching a fourteen-year high of 1.670 million in December.

The report also showed a much bigger than expected decrease in building permits, which plummeted by 10.8 percent to an annual rate of 1.682 million in February after spiking by 10.7 percent to a revised rate of 1.886 million in January.

Building permits, an indicator of future housing demand, had been expected to tumble by 7 percent to a rate of 1.750 million from the 1.881 million originally reported for the previous month.

Sector News

Software stocks have shown a significant move to the downside over the course of the session, dragging the Dow Jones U.S. Software Index down by 1.7 percent.

Considerable weakness has also emerged among semiconductor stocks, as reflected by the 1.4 percent drop by the Philadelphia Semiconductor Index.

On the other hand, housing stocks have moved notably higher despite the disappointing housing starts data, driving the Philadelphia Housing Sector Index up by 1.2 percent.

Most of the other major sectors are showing only modest moves on the day, as traders await the Fed's monetary policy announcement.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a lackluster performance on Wednesday ahead of the Fed announcement. Japan's Nikkei 225 Index and China's Shanghai Composite Index both ended the day nearly unchanged.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.'s FTSE 100 Index is down by 0.5 percent, the French CAC 40 Index is just above the unchanged line and the German DAX Index is up by 0.2 percent.

In the bond market, treasuries have shown a significant move to the downside. 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 1.685 percent.

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