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Nasdaq, S&P 500 Finish Choppy Session In The Red, Dow Nearly Flat

wallstreet higher 050119 07dec22 lt

After moving sharply lower to start the week, stocks turned in a relatively lackluster performance during trading on Wednesday. The major averages spent most of the day bouncing back and forth across the unchanged line.

The tech-heavy Nasdaq eventually ended the session down 56.34 points or 0.5 percent at 10,958.55. The S&P 500 also edged down 7.34 points or 0.2 percent to 3,933.92, closing lower for the fifth straight session, while the Dow inched up 1.58 points or less than a tenth of a percent to 33,597.92.

The choppy trading on Wall Street came as traders expressed uncertainty about the near-term outlook for the markets ahead of next week's Federal Reserve meeting.

The Fed still seems poised to slow the pace of interest rate hikes, but recent upbeat economic data has raised concerns about how much further the central bank will raise rates at future meetings.

Traders are likely to pay close attention to the Fed's accompanying statement, although a lot of key data will be released before the next meeting in late January/early February.

The recent selling on Wall Street partly reflects worries the Fed will be need to push the economy into a prolonged recession in order to bring inflation down close to its 2 percent target.

The negative sentiment was partly offset by a report from the Labor Department showing unit labor costs jumped by much less than previously estimated in the third quarter.

The report showed the surge in unit labor costs in the third quarter was downwardly revised to 2.4 percent from 3.5 percent. The jump in unit labor costs was expected to be downwardly revised to 3.2 percent.

The downward revision to unit labor cost growth reflected an upward revision to labor productivity as well as a downward revision to the spike in hourly compensation.

The data may have helped offset recent inflation concerns, although traders continue to look ahead to Friday's report on producer price inflation in November.

The University of Michigan is also due to release its preliminary report on consumer sentiment in the month of December on Friday. The report includes readings on inflation expectations that could impact the outlook for interest rates.

Sector News

Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves in afternoon trading.

Airline stocks showed a substantial move to the downside, however, dragging the NYSE Arca Airline Index down by 3.1 percent to its lowest closing level in a month.

Considerable weakness also emerged among oil service stocks, as reflected by the 2.3 percent slump by the Philadelphia Oil Service Index.

The weakness in the oil service sector came as the price of crude oil extended a recent sell-off, with crude for January delivery tumbling $2.24 to $72.01 a barrel.

Steel, networking and brokerage stocks also moved to the downside, although selling pressure was somewhat subdued.

On the other hand, housing stocks moved sharply higher on the day, driving the Philadelphia Housing Sector Index up by 2.3 percent.

Gold stocks also turned in a strong performance amid an increase by the price of the precious metal, resulting in a 1.5 percent gain by the NYSE Arca Gold Bugs.

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 0.7 percent, while Hong Kong's Hang Seng Index plummeted by 3.2 percent.

The major European markets also moved to the downside on the day. While the German DAX Index fell by 0.6 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both dipped by 0.4 percent.

In the bond market, treasuries moved sharply higher, extending the strong upward move seen on Tuesday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 10.5 basis points to a nearly three-month closing low of 3.408 percent.

Looking Ahead

A report on weekly jobless claims may attract some attention on Thursday, although trading may be somewhat subdued ahead of Friday's data.

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