With traders seemingly reluctant to make any significant moves, stocks showed a lack of direction over the course of the trading day on Wednesday. The choppy trading reflected uncertainty about the outlook for the markets following recent strength.
The major averages eventually ended the session mixed, with the Dow posting a modest loss. While the Dow edged down 13.02 points or 0.1 percent to 12,449.45, the Nasdaq rose 8.26 points 0.3 percent to 2,710.76 and the S&P 500 inched up 0.40 points or less than a tenth of a percent to 1,292.48.
Profit taking contributed to some early weakness on Wall Street, although selling pressure remained relatively subdued as many traders stayed on the sidelines.
The lackluster performance seen for the remainder of the session came as traders looked ahead to monetary policy meetings by the European Central Bank and the Bank of England on Thursday.
Some major U.S. economic data is also due to be released on Thursday, including reports on December retail sales and weekly jobless claims.
Meanwhile, traders largely shrugged off the Federal Reserve's Beige Book report, which said that U.S. economic activity expanded at a modest to moderate pace in the latter part of last year.
The Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Fed districts, was largely viewed as old news.
The Fed said, "The reports on balance suggest ongoing improvement in economic conditions in recent months, with most Districts highlighting more favorable conditions than identified in reports from the late spring through early fall."
Among individual stocks, shares of Eastman Kodak (EK) showed a notable move to the upside after the company said it has filed lawsuits against Apple (AAPL) and HTC Corp. for alleged infringement of certain Kodak patents relating to digital imaging technology.
Footwear maker Crocs (CROX) also turned in a strong performance after the company said it expects annual revenues to surpass $1 billion for the first time in fiscal year 2011. The company also forecast that its fourth quarter revenues will come in at the high end of its guidance.
Meanwhile, shares of Urban Outfitters (URBN) came under pressure after the apparel retailer announced the resignation of its CEO Glen Senk. The company said its chairman and co-founder Richard Hayne will assume the role of CEO.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.
Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the French CAC 40 Index and the German DAX Index both edged down by 0.2 percent.
In the bond market, treasuries showed a strong upward move amid lingering concerns about Europe and strong demand for a ten-year note auction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.8 basis points to 1.904 percent.
Despite the lack of direction shown by the broader markets, housing stocks showed a substantial move to the upside on the day. The Philadelphia Housing Sector Index surged up by 3.1 percent to an eight-month closing high.
The strength in the housing sector came after homebuilder Lennar (LEN) reported a 20 percent increase in new orders in the fourth quarter. Shares of Lennar rose by 7.2 percent.
Significant strength also emerged among biotechnology stocks, as reflected by the 2.3 percent gain posted by the NYSE Arca Biotechnology Index. The index reached its best closing level in five months amid strong gains by Human Genome Sciences (HGSI) and Dendreon (DNDN).
While networking, banking, and healthcare provider stocks also moved to the upside on the day, natural gas stocks moved sharply lower amid a steep drop by the price of natural gas. The NYSE Arca Natural Gas Index tumbled by 3.3 percent on the day.
Oil service, tobacco, and gold stocks also came under pressure, with the oil service stocks moving lower along with the price of crude oil.
Trading on Thursday is likely to driven by reaction to the monetary policy decisions out of Europe as well as the key U.S. economic reports mentioned above.
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