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U.S. Stocks Giving Back Ground Following Recent Strength

wallstreet sept27 17aug22 lt

After trending higher in recent sessions, stocks are giving back ground in morning trading on Wednesday. The major averages have all moved to the downside, with the tech-heavy Nasdaq leading the way lower.

In recent trading, the Nasdaq and the S&P 500 have fallen to new lows for the session. The Nasdaq is down 164.03 points or 1.3 percent at 12,938.52, the S&P 500 is down 33.91 points or 0.8 percent at 4,271.29 and the Dow is down 188.86 points or 0.6 percent at 33,963.15.

The pullback on Wall Street may partly reflect profit taking, as some traders cash in on the recent strength in the markets amid lingering concerns about the economy, inflation and interest rates.

While the Nasdaq edged lower on Tuesday, the Dow and the S&P 500 reached their best closing levels in almost four months.

A notable drop by shares of Target (TGT) is also weighing on Wall Street, with the discount retailer slumping by 2.3 percent on the day.

The pullback by Target comes after the company reported second quarter earnings that fell well short of analyst estimates, as it cut prices in an effort to reduce excess inventory.

On the other hand, shares of Lowe's (LOW) have moved sharply higher after the home improvement retailer reported second quarter earnings that beat analyst estimates and forecast full-year earnings toward the top end of its outlook range.

Traders are also digesting a Commerce Department report showing U.S. retail sales came in flat in July amid pullbacks in gas station and auto sales.

The Commerce Department said retail sales were virtually unchanged in July after climbing by a downwardly revised 0.8 percent in June.

Economists had expected retail sales to inch up by 0.1 percent compared to the 1.0 percent jump originally reported for the previous month.

Excluding gas station and auto sales, retail sales rose by 0.7 percent in July, matching the increase seen in the previous month.

Later in the day, the Federal Reserve is scheduled to release the minutes of its latest monetary policy meeting, potentially shedding additional light on the outlook for interest rates.

Semiconductor stocks have moved sharply lower in morning trading, dragging the Philadelphia Semiconductor Index down by 2.9 percent.

Substantial weakness has also emerged among gold stocks, as reflected by the 2.4 percent slump by the NYSE Arca Gold Bugs Index.

The sell-off by gold stocks comes amid a modest decrease by the price of the precious metal, with gold for December delivery slipping $5.70 to $1,784 an ounce.

Steel, airline and networking stocks are also seeing considerable weakness on the day, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.2 percent, while China's Shanghai Composite Index rose by 0.5 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the German DAX Index has tumbled by 1.6 percent, the French CAC 40 Index is down by 0.9 percent and the U.K.'s FTSE 100 Index is down by 0.3 percent.

In the bond market, treasuries have regained ground after an early slump but remain firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.5 basis points at 2.879 percent.

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