Dow Remains Firmly Positive But Nasdaq Showing A Lack Of Direction

After showing a strong move to the upside early in the session, the Dow remains firmly in positive territory in mid-day trading on Wednesday. Meanwhile, the tech-heavy Nasdaq has spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 54.99 points or 0.4 percent at 13,172.70, the Dow is up 309.79 points or 1 percent at 32,732.94 and the S&P 500 is up 22.69 points or 0.6 percent at 3,933.21.

The notable advance by the Dow is partly due to strong gains by Dow Inc. (DOW), Caterpillar (CAT) and Honeywell (HON).

Cyclical stocks are benefiting from continued optimism about the economic outlook despite the release of disappointing data on durable goods orders.

Before the start of trading, the Commerce Department released a report showing new orders for U.S. manufactured durable goods unexpectedly decreased in the month of February.

The Commerce Department said durable goods orders slumped by 1.1 percent in February after spiking by an upwardly revised 3.5 percent in January.

The pullback came as a surprise to economists, who had expected durable goods orders to climb by 0.8 percent compared to the 3.4 percent jump that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders still fell by 0.9 percent in February after surging up by 1.6 percent in January. Economists had expected a 0.6 percent increase.

The data follows the recent release of disappointing reports on retail sales, industrial production and home sales, although the weakness is largely seen as the result of severe winter storms.

Sector News

Energy stocks continue to see substantial strength on the day, benefiting from a rebound by the price of crude oil. Crude for May delivery is spiking $2.93 to $60.67 a barrel after plummeting $3.80 to $57.76 a barrel on Tuesday.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index is up by 3.7 percent and the Philadelphia Oil Service Index is up by 3.5 percent. Both indexes are bouncing off their lowest closing levels in a month.

Significant strength has also emerged among steel stocks, as reflected by the 3.6 percent jump by the NYSE Arca Steel Index.

Airline stocks are also rebounding following recent weakness, with the NYSE Arca Steel Index surging up by 2.6 percent.

Chemical, housing and banking stocks are also seeing notable strength, while some weakness among software and biotech stocks is weighing on the tech-heavy Nasdaq.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index plunged by 2 percent, while China’s Shanghai Composite Index tumbled by 1.3 percent.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.’s FTSE 100 Index has inched up by 0.2 percent, the French CAC 40 Index is just below the unchanged line and the German DAX Index is down by 0.5 percent.

In the bond market, treasuries have pulled back near the unchanged line after moving modestly higher in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.642 percent.

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