U.S. Stocks Pull Back Off Best Levels But Remain Mostly Positive
Stocks moved mostly higher in early trading on Wednesday but have given back ground over the course of the session. While the major averages have pulled back off their highs of the session, they remain in positive territory.
After jumping by more than 200 points early in the session, the Dow is currently up 70.00 points or 0.2 percent at 33,122.87. The Nasdaq is up 87.40 points or 0.7 percent at 12,938.64 and the S&P 500 is up 18.43 points or 0.4 percent at 4,212.23.
The early strength on Wall Street came as the release of some weaker than expected U.S. economic data eased concerns about the outlook for interest rates ahead of the Federal Reserve’s monetary policy announcement this afternoon.
Payroll processor ADP released a report before the start of trading showing private sector employment in the U.S. increased by less than expected in the month of October.
The report said private sector employment climbed by 113,000 jobs in October after rising by 89,000 jobs in September. Economists had expected employment to jump by 150,000 jobs.
A separate report released by the Institute for Supply Management showed manufacturing activity in the U.S. unexpectedly contracted at a faster rate in the month of October.
The ISM said its manufacturing PMI fell to 46.7 in October from 49.0 in September, with a reading below 50 indicating a contraction. Economists had expected the index to come in unchanged compared to the previous month.
Buying interest has waned over the course of the session, however, as traders express some caution ahead of the Fed’s announcement.
With the Fed widely expected to leave interest rates unchanged for the second consecutive meeting, traders will pay close attention to the accompanying statement for clues about the outlook for rates.
CME Group’s FedWatch Tool is currently indicating a 98.8 percent chance the Fed will leave rates unchanged today and a 74.6 percent chance rates will remain unchanged in December.
Housing stocks continue to see significant strength in afternoon trading, resulting in a 1.6 percent advance by the Philadelphia Housing Sector Index.
Considerable strength also remains visible among software stocks, as reflected by the 1.0 percent gain being posted by the Dow Jones U.S. Software Index.
Semiconductor stocks are also turning in a strong performance on the day, with Advanced Micro Devices (AMD) leading the way higher after reporting better than expected third quarter earnings and providing upbeat guidance for its AI chip business.
On the other hand, networking stocks have pulled back sharply after rallying on Tuesday, dragging the NYSE Arca Networking Index down by 2.2 percent.
Extreme Networks (EXTR) is posting a substantial loss after reporting fiscal first quarter results that exceeded expectations but providing disappointing guidance.
Telecom stocks have also shown a notable move to the downside, with the NYSE Arca North American Telecom Index falling by 1.4 percent.
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Significant strength has also emerged among housing stocks, as reflected by the 1.4 percent gain being posted by the Philadelphia Housing Sector Index.
Brokerage, computer hardware and oil stocks are also seeing notable strength, while networking stocks are giving back ground following the rally seen on Tuesday.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index surged by 2.4 percent, while South Korea’s Kospi jumped by 1.0 percent.
The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index rose by 0.3 percent, the French CAC 40 Index and the German DAX Index advanced by 0.7 percent and 0.8 percent, respectively.
In the bond market, treasuries have pulled back off their best levels of the day but remain in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.9 basis points at 4.816 percent.
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