U.S. Stocks Fluctuate But Close Mostly Higher

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Stocks fluctuated over the course of the trading session on Wednesday before ending the day mostly higher. The Nasdaq and the S&P 500 moved to the upside on the day, although the narrower Dow closed nearly unchanged.

While the Dow edged down 0.53 points or less than a tenth of a percent to 34,377.81, the Nasdaq climbed 105.71 points or 0.7 percent to 14,571.64 and the S&P 500 rose 13.15 points or 0.3 percent to 4,363.80. The Nasdaq and the S&P 500 snapped three-session losing streaks.

The higher close on Wall Street came as a report from the Labor Department showed consumer prices rose by slightly more than expected in September, but the data was not seen as likely to accelerate the Federal Reserve's tapering plans.

The Labor Department said its consumer price index climbed by 0.4 percent in September after rising by 0.3 percent in August. Economists had been expecting another 0.3 percent increase.

Excluding higher prices for food and energy, core consumer prices edged up by 0.2 percent in September after inching up by 0.1 percent in August. The uptick in core prices matched economist estimates.

The report also showed the annual rate of growth in consumer prices accelerated to 5.4 percent in September from 5.3 percent in August, while the annual rate of growth in core prices was unchanged at 4.0 percent.

Later in the day, the minutes of the Fed's September meeting outlined the central bank's plans to gradually scale back its asset purchases.

The minutes revealed participants generally agreed that a gradual tapering of asset purchases that concludes around the middle of next year would likely be appropriate if the economic recovery remained broadly on track.

Participants noted that if a decision to begin tapering purchases occurred at the Fed's next meeting in early November, the process of tapering could begin with the monthly purchase calendars beginning in either mid-November or mid-December.

The meeting also included a discussion on how slowing the current rate of bond purchases of $120 billion per month might proceed.

The minutes highlighted an "illustrative path" that features monthly reductions of $10 billion in the purchase of Treasury securities and $5 billion in the purchase of agency mortgage-backed securities.

Participants noted that the Fed could adjust the pace of the moderation of its purchases if economic developments were to differ substantially from what they expected.

A note from Capital Economics said the minutes "make it clear" that the Fed will announce tapering plans at its next meeting scheduled for November 2nd and 3rd.

"The scheduled monthly reductions could, in theory, be sped up or down at a later date, but we suspect the bar to doing so will be pretty high," Capital Economics said. "The Fed will essentially be putting the taper on 'automatic pilot,' which is similar to what it did with the balance sheet run off that began in 2017."

On the earnings front, shares of Delta Air Lines (DAL) moved sharply lower after the airline beat third quarter estimates but warned of a fourth quarter loss due to higher fuel costs.

JPMorgan Chase (JPM) also moved to the downside even though the financial giant reported third quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, asset management firm Blackrock (BLK) posted a strong gain after reporting better than expected third quarter earnings and revenues.

Sector News

Gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 3.4 percent to its best closing level in over a month.

The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for December delivery spiking $35.40 to $1,794.70 an ounce.

Significant strength was also visible among tobacco stocks, as reflected by the 2.8 percent jump by the NYSE Arca Tobacco Index.

Software stocks also turned in a strong performance on the day, resulting in a 1.6 percent advance by the Dow Jones U.S. Software Index.

On the other hand, the steep drop by Delta weighed on the airline sector, dragging the NYSE Arca Airline Index down by 2.3 percent.

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 fell by 0.3 percent, while China's Shanghai Composite Index rose by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index advanced by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries moved higher over the course of the session after initially showing a lack of direction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.1 basis points to 1.549 percent.

Looking Ahead

A Labor Department report on producer price inflation in the month of September may attract attention on Thursday along with the weekly jobless claims report.

On the earnings front, Bank of America (BAC), Citigroup (C), Morgan Stanley (MS), UnitedHealth (UNH), Walgreens (WBA) and Wells Fargo (WFC) are among the companies due to report their quarterly results before the start of trading on Thursday.

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