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Dow Lingering Near Unchanged Line In Mid-Day Trading - U.S. Commentary

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With many traders sitting on the sidelines, stocks continue to turn in a relatively lackluster performance in mid-day trading on Wednesday. The Dow has been bouncing back and forth across the unchanged line, although the broader Nasdaq and S&P 500 remain in positive territory.

Currently, the major averages are turning in a mixed performance. While the Dow is down 7.57 points or less than a tenth of a percent at 26,143.01, the Nasdaq is up 39.37 points or 0.5 percent at 7,948.65 and the S&P 500 is up 6.97 points or 0.2 percent at 2,885.17.

The choppy trading on Wall Street comes as traders seem reluctant to make significant moves ahead of this afternoon's release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes of the Fed's March meeting may shed additional light on the central bank's decision to indicate that it no longer expects any more interest rates hikes this year.

Some analysts described the Federal Reserve's decision to downwardly revise its forecast for interest rates as an effort to keep the stock markets afloat amid an expected contraction in first quarter earnings.

The looming earnings season is also keeping traders on the sidelines, with financial giants JPMorgan Chase (JPM) and Wells Fargo (WFC) due to report their quarterly results before the start of trading on Friday.

On the U.S. economic front, the Labor Department released a report showing a spike in energy prices contributed to a slightly bigger than expected increase in consumer prices in the month of March.

The Labor Department said its consumer price index climbed by 0.4 percent in March after edging up by 0.2 percent in February. Economists had expected the index to rise by 0.3 percent.

Excluding the jump in energy prices and a modest increase in food prices, core consumer prices inched up by 0.1 percent in February, matching the uptick seen in the previous month. Core prices had been expected to tick up by 0.2 percent.

With the monthly increase, the Labor Department said the annual rate of consumer price growth accelerated to 1.9 percent in March from 1.5 percent in February.

On the other hand, the report said the annual rate of growth in core consumer prices slowed to 2.0 percent from 2.1 percent.

Andrew Hunter, Senior U.S. Economist at Capital Economics, said the slowdown in core price growth to a 13-month low "underlines that there is little chance of inflation breaking out above the Fed's target any time soon."

"We continue to expect that weaker activity growth will convince officials to start cutting interest rates before the end of the year," Hunter added.

Sector News

Reflecting the lackluster performance by the broader markets, most of the major sectors continue to show only modest moves in mid-day trading.

Networking and computer hardware stocks are seeing considerable strength, however, with the NYSE Arca Networking Index and the NYSE Arca Computer Hardware Index climbing by 1.3 percent and 1.2 percent, respectively.

Significant strength is also visible among oil service stocks, as reflected by the 1.3 percent gain being posted by the Philadelphia Oil Service Index.

The strength in the oil service sector comes as the price of crude oil for May delivery is rising $0.28 to $64.26 a barrel despite the release of a report showing a bigger than expected weekly jump in crude oil inventories.

Biotechnology, software, and semiconductor stocks have also moved to the upside, contributing to the advance by the tech-heavy Nasdaq.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.5 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the French CAC 40 Index rose by 0.3 percent and the German DAX Index climbed by 0.5 percent.

In the bond market, treasuries are extending the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.479 percent.

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