Following the lackluster performance seen in the previous session, stocks continued to show a lack of direction over the course of the trading day on Wednesday. The major averages hit new record intraday highs in early trading but spent the rest of the day bouncing back and forth across the unchanged line.
Eventually, the major averages ended the day mixed, with the Dow inching up to a new record closing high. The Dow rose 61.96 points or 0.2 percent to 31,437.80, while the Nasdaq fell 35.16 points or 0.3 percent to 13,972.53 and the S&P 500 edged down 1.35 points or less than a tenth of a percent to 3,909.88.
Stocks initially moved to the upside on the heels of upbeat earnings news from big-name companies like Twitter (TWTR), Coca-Cola (KO), and Lyft (LYFT), with the major averages reaching new record intraday highs.
Buying interest waned shortly after the start of trading, however, as traders expressed some uncertainty about the near-term outlook for the markets.
The major averages subsequently pulled back sharply, with the tech-heavy Nasdaq leading the way lower amid weakness among stocks like Amazon (AMZN) and Apple (AAPL).
Traders may be worried that the markets have become overbought as a new fiscal stimulus bill continues to slowly work its way through Congress.
Negotiations over the previous bipartisan bill took months to complete, and it remains to be seen if Democrats will be able to keep their caucus together and pass a relief package through the reconciliation process.
Stocks saw some strength in afternoon trading as Federal Reserve Chair Jerome Powell appeared to express support for more stimulus, as he said maintaining “patiently accommodative monetary policy” will be important to returning to a strong labor market but argued more needs to be done.
“It will require a society-wide commitment, with contributions from across government and the private sector,” Powell said during remarks at a virtual Economic Club of New York event.
He added, “I am confident that with our collective efforts across the government and the private sector, our nation will make sustained progress toward our national goal of maximum employment.”
In economic news, the Labor Department released a report showing consumer prices in the U.S. increased in line with economist estimates in the month of January.
The Labor Department said its consumer price index rose by 0.3 percent in January after edging up by a revised 0.2 percent in December.
Economists had expected consumer prices to climb by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.
Excluding food and energy prices, core consumer prices came in unchanged for the second consecutive month. Core prices were expected to rise by 0.2 percent.
Despite the lack of direction shown by the broader markets, airline stocks showed a strong move back to the upside following the pullback seen in the previous session.
After slumping by 1.6 percent on Tuesday, the NYSE Arca Airline Index soared by 2.4 percent to its best closing level in almost a year.
Significant strength was also visible among energy stocks, which moved higher amid a continued increase by the price of crude oil. Crude for March delivery rose $0.32 to $58.68 a barrel, closing higher for the eighth straight session.
Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged up by 2.1 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index both climbed by 1.6 percent.
On the other hand, tobacco stocks gave back ground following recent strength, dragging the NYSE Arca Tobacco Index down by 1.1 percent. The index ended the previous session at its best closing level in well over a year.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index inched up by 0.2 percent, while China’s Shanghai Composite Index jumped by 1.4 percent.
Meanwhile, the major European markets moved to the downside over the course of the session. While the U.K.’s FTSE 100 Index edged down by 0.1 percent, the French CAC 40 Index fell by 0.4 percent and the German DAX Index slid by 0.6 percent.
In the bond market, treasuries rebounded after moving to the downside at the start of trading. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.4 basis points to 1.133 percent.
Trading on Thursday may be impacted by reaction to the Labor Department’s report on weekly jobless claims, with claims expected to show a continued decrease.
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