U.S. Stocks Show Modest Move To The Downside

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Stocks saw modest weakness during trading on Wednesday, giving back ground after ending the previous session mostly higher. Selling pressure was somewhat subdued, however, limiting the downside for the major averages.

The major averages fluctuated over the course of the session but closed in negative territory. The Dow slid 211.17 points or 0.6 percent to 35,931.05, the Nasdaq fell 52.28 points or 0.3 percent to 15,921.57 and the S&P 500 dipped 12.23 points or 0.3 percent to 4,688.67.

The modest weakness on Wall Street came as traders expressed some uncertainty about the near-term outlook for the markets following recent volatility.

While worries about inflation contributed to a pullback by stocks last week, the Nasdaq and S&P 500 ended Tuesday's trading just shy of their record closing highs following upbeat retail sales and industrial production data.

With the economy seemingly holding up well in the face of elevated inflation, traders remain concerned the Federal Reserve could accelerate its plans to tighten monetary policy.

Meanwhile, traders showed a mixed reaction to earnings news from retail giants Target (TGT) and Lowe's (LOW).

Shares of Target moved sharply lower even though the retailer reported third quarter results that beat expectations on both the top and bottom lines.

On the other hand, shares of Lowe's (LOW) closed modestly higher after the home improvement retailer reported better than expected third quarter results and raised its full-year revenue guidance.

In U.S. economic news, the Commerce Department released a report showing an unexpected decrease in new residential construction in the month of October, although the report also showed a bigger than expected spike in building permits.

The report showed housing starts slid by 0.7 percent to an annual rate of 1.520 million in October after tumbling by 2.7 percent to a revised rate of 1.530 million in September.

The continued decline came as a surprise to economists, who had expected housing starts to jump by 1.6 percent to an annual rate of 1.580 million from the 1.555 million originally reported for the previous month.

Meanwhile, the Commerce Department said building permits surged up by 4.0 percent to an annual rate of 1.650 million in October after plummeting by 7.8 percent to a revised rate of 1.586 million in September.

Sector News

Oil service stocks moved sharply lower over the course of the session, dragging the Philadelphia Oil Service Index down by 3.2 percent to its lowest intraday level in well over a month.

The sell-off by oil service stocks came as the price of crude oil for December delivery plunged $2.40 to $78.36 a barrel amid concerns about rising supplies.

Significant weakness also emerged among steel stocks, as reflected by the 1.9 percent drop by the NYSE Arca Steel Index. The index slid to an eight-month closing low.

Brokerage, transportation and natural gas stocks also saw considerable weakness on the day, while some strength was visible among housing and gold stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while Hong Kong's Hang Seng Index dipped by 0.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index slid by 0.5 percent, the German DAX Index closed just above the unchanged line and the French CAC 40 Index inched up by 0.1 percent.

In the bond market, treasuries moved back to the upside after trending lower over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 1.604 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, Philadelphia-area manufacturing activity and leading economic indicators.

On the earnings front, Cisco Systems (CSCO), Nvidia (NVDA), Bath & Body Works (BBWI) and Victoria's Secret (VSCO) are among the companies releasing their quarterly results after the close of today's trading.

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