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Stocks Continue To Turn In Lackluster Performance - U.S. Commentary


After showing a lack of direction early in the session, stocks continue to turn in a lackluster performance in mid-day trading on Wednesday. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 30.78 points or 0.1 percent at 25,380.74, the Nasdaq is down 27.80 points or 0.4 percent at 7,374.29 and the S&P 500 is down 7.25 points or 0.3 percent at 2,730.45.

The choppy trading on Wall Street comes as traders express some uncertainty about the outlook for the markets following the trend upward trend, which has lifted the major averages to their best levels in two months.

The markets have recently benefited from positive momentum generated by indications the prolonged government shutdown did not have a significant impact on the U.S. economy.

Nonetheless, uncertainty about trade talks between the U.S. and China continues to hang over the markets, as President Donald Trump's State of the Union address last night lacked details on progress in the talks.

Treasury Secretary Steven Mnuchin called last week's meetings with Chinese Vice Premier Liu He "very productive" in an interview with CNBC's "Squawk Box," although traders may be looking for more concrete results.

In related news, the Commerce Department released a government shutdown-delayed report showing the U.S. trade deficit narrowed by much more than anticipated in the month of November.

The Commerce Department said the trade deficit narrowed to $49.3 billion in November from a revised $55.7 billion in October.

Economists had expected the deficit to narrow to $54.0 billion from the $55.5 billion originally reported for the previous month.

Andrew Hunter, Senior U.S. Economist at Capital Economics, said the data suggests that trade made a small positive contribution to GDP growth in the fourth quarter

"That boost is unlikely to last for long, however. Along with the appreciation of the dollar last year, the slowdown in global demand will continue to weigh on exports for the foreseeable future," Hunter said. "As a result, we expect trade to be a small drag on economic growth for most of this year."

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Semiconductor stocks continue to see substantial, however, with the Philadelphia Semiconductor Index surging up by 3 percent to a four-month intraday high.

Shares of Skyworks Solutions (SWKS) are sharply higher after the chipmaker reported weaker than expected fiscal first quarter results but announced a $2 billion stock repurchase program.

Microchip Technology (MCHP) is also posting a standout gain after reporting fiscal third quarter results that exceeded analyst estimates on both the top and bottom lines.

Meanwhile, tobacco and telecom stocks have shown notable moves to the downside over the course of the trading session.

In overseas trading, stock markets across the Asia-Pacific moved to the upside on Wednesday, although most markets were closed for holidays. Japan's Nikkei 225 Index inched up by 0.1 percent, while Australia's S&P/ASX 200 Index rose by 0.3 percent.

Meanwhile, the major European markets moved modestly lower on the day. While the German DAX Index fell by 0.4 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both edged down by 0.1 percent.

In the bond market, treasuries have pulled back off their best levels but continue to see modest strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.3 basis points at 2.689 percent.

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