Nasdaq Moves Sharply Lower But Dow Posts Modest Gain

Following the weakness seen in the previous session, the major U.S. stock indexes turned in a mixed performance during trading on Wednesday.

While the Dow rose 80.34 points or 0.2 percent to 33,482.72, the S&P 500 spent the day in negative territory before closing down 10.22 points or 0.3 percent to 4,090.38.

The tech-heavy Nasdaq showed a more significant move to the downside, slumping 129.47 points or 1.1 percent to 11,996.86 and pulling back further off last Friday’s six-month closing high.

The uptick by the Dow was partly due to a strong gain by shares of Johnson & Johnson (JNJ), with the healthcare giant surging by 4.5 percent.

The jump by J&J came after the company announced it has agreed to pay $8.9 billion over 25 years to settle claims that the talc in its baby powder and other products caused cancer.

Other healthcare-related Dow components like UnitedHealth (UNH), Merck (MRK) and Amgen (AMGN) are also posting notable gains.

Meanwhile, concerns about the economic outlook weighed on the Nasdaq and the S&P 500 following the release of disappointing data.

Payroll processor ADP released a report before the start of trading showing private sector employment increased by less than expected in the month of March.

ADP said private sector employment rose by 145,000 jobs in March after climbing by an upwardly revised 261,000 jobs in February.

Economists had expected private sector employment to advance by 200,000 jobs compared to the addition of 242,000 jobs originally reported for the previous month.

“Our March payroll data is one of several signals that the economy is slowing,” said ADP chief economist Nela Richardson. “Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.”

A separate report released by the Institute for Supply Management showed growth in U.S. service sector activity slowed by much more than expected in the month of March.

The ISM said its services PMI slid to 51.2 in March from 55.1 in February. While a reading above 50 still indicates growth in the sector, economists had expected the index to show a much more modest decrease to 54.5.

Sector News

Brokerage stocks showed a significant move to the downside on the day, dragging the NYSE Arca Broker/Dealer Index down by 1.9 percent.

Considerable weakness was also visible among semiconductor stocks, as reflected by the 1.8 percent drop by the Philadelphia Semiconductor Index.

The semiconductor index continued to give back ground after ending last Friday’s trading at its best closing level in almost a year.

Airline, retail and software stocks also saw notable weakness, while utilities stocks moved sharply higher, driving the Dow Jones Utility Average up by 2.6 percent to a two-month closing high.

The jump by shares of Johnson & Johnson also contributed to strength in the pharmaceutical sector, with the NYSE Arca Pharmaceutical Index climbing by 1.8 percent to its best intraday level in three months.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday, with markets in mainland China and Hong Kong closed for a holiday. Japan’s Nikkei 225 Index tumbled by 1.7 percent, while South Korea’s Kospi climbed by 0.6 percent.

The major European markets also finished the day mixed. While the U.K.’s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index fell by 0.4 percent and the German DAX Index slid by 0.5 percent.

In the bond market, treasuries extended the upward trend seen over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5 basis points to a nearly seven-month closing low of 3.287 percent.

Looking Ahead

A report on weekly jobless claims may attract attention on Thursday, although trading activity may be somewhat subdued ahead of the release of the Labor Department’s more closely watched monthly jobs report on Friday.

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