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U.S. Stocks Continue To Turn In Lackluster Performance

wallstreet oct10 29jun22 lt

After showing a lack of direction early in the session, stocks continue to turn in a relatively lackluster performance in afternoon trading on Wednesday. The major averages have been bouncing back and forth across the unchanged line following the steep drop seen in the previous session.

Recently, the Nasdaq and the S&P 500 have been lingering in negative territory, while the narrower Dow is roughly flat. While the Dow is up 10.49 points or less than a tenth of a percent at 30,957.48, the Nasdaq is down 52.07 points or 0.5 percent at 11,129.47 and the S&P 500 is down 13.93 points or 0.4 percent at 3,807.62.

The choppy trading on Wall Street comes as uncertainty about the near-term outlook for the markets is keeping some traders on the sidelines following recent volatility.

The sharp pullback during trading on Tuesday came on the heels of the strong upward move seen last week, which in turn reflected a rebound from the sell-off seen earlier this month.

Traders also kept an eye on remarks by Federal Reserve Chair Jerome Powell, who participated in a panel discussion at the European Central Bank Forum on Central Banking alongside ECB President Christine Lagarde and Bank of England Governor Andrew Bailey.

Powell reiterated his previously shared belief that the U.S. economy is "well positioned to withstand tighter monetary policy" but cautioned there's no guarantee the Fed can engineer a "soft landing."

"We think that there are pathways for us to achieve the path back to 2 percent inflation while still retaining a strong labor market. We believe we can do that," Powell said. "It's obviously something that's going to be quite challenging."

The Fed chief once again declared his commitment to fighting inflation, arguing that failing to restore price stability poses a bigger risk to the economy than tightening monetary policy too aggressively.

In U.S. economic news, revised data released by the Commerce Department showed U.S. economic activity shrank by slightly more than previously estimated in the first quarter of 2022.

The report showed the decrease in real gross domestic product in the first quarter was revised to 1.6 percent from the previously reported 1.5 percent. Economists had expected the drop in GDP to be unrevised.

The slightly bigger than previously estimated decline in GDP in the first quarter came on the heels of the 6.9 percent spike in GDP in the fourth quarter of 2021.

Sector News

Oil stocks have come under considerable pressure over the course of the session, dragging the NYSE Arca Oil Index down by 1.9 percent.

The weakness among oil stocks comes amid a pullback by the price of crude oil, with crude for August delivery falling $0.74 to $111.02 a barrel after reaching a high of $114.05 a barrel.

Substantial weakness also remains visible among semiconductor stocks, as reflected by the 2.7 percent nosedive by the Philadelphia Semiconductor Index.

Tobacco stocks have also shown a significant move to the downside on the day, resulting in a 2.4 percent slump by the NYSE Arca Tobacco Index.

Natural gas, steel and airline stocks are also seeing notable weakness in afternoon trading, while pharmaceutical stocks are seeing some strength on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slid by 0.9 percent, while China's Shanghai Composite Index tumbled by 1.4 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index edged down by 0.2 percent, the French CAC 40 Index slumped by 0.9 percent and the German DAX Index dove by 1.7 percent.

In the bond market, treasuries have moved notably higher after ending the previous session little changed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 9.3 basis points at 3.113 percent.

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