After coming under pressure early in the session stocks have regained ground over the course of the trading day on Tuesday. The major averages have climbed well off their early lows are now lingering near the unchanged line.
Currently, the major averages are narrowly mixed. While the S&P 500 is up 5.13 points or 0.1 percent at 4,171.95, the Dow is down 8.59 points or less than a tenth of a percent at 32,920.37 and the Nasdaq is down 9.70 points or 0.1 percent at 12,779.78.
The early weakness on Wall Street partly reflected a negative reaction to a report from the Labor Department showing employment costs jumped by slightly more than expected in the third quarter.
The Labor Department said its employment cost index shot up by 1.1 percent in the third quarter compared to economist estimates for a 1.0 percent advance.
However, the report also showed the annual rate of growth by the employment cost index slowed to 4.3 percent in the third quarter from 4.5 percent in the second quarter.
Selling pressure waned shortly after the start of trading, as traders seemed reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.
While the Fed is widely expected to leave interest rates unchanged, 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 99.6 percent chance the Fed will leave rates unchanged on Wednesday and a 75.1 percent chance rates will remain unchanged next month.
“The Fed is still wary of letting their guard down too early after missing their inflation target badly in the last few years,” said Bill Adams, Chief Economist for Comerica Bank.
He added, “They are likely to signal tomorrow that they are prepared to raise interest rates again if inflation strays from its current downward trajectory.”
Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.
Networking stocks have shown a substantial rebound, however, with the NYSE Arca Networking Index surging by 2.8 percent after tumbling to its lowest closing level in well over a year on Monday.
Arista Networks (ANET) is leading the way back to the upside after the cloud networking solutions company reported third quarter results that beat expectations on both the top and bottom lines.
Considerable strength is also visible among housing stocks, as reflected by the 1.4 percent gain being posted by the Philadelphia Housing Sector Index.
On the other hand, airline stocks have moved sharply lower on the day, dragging the NYSE Arca Airline Index down by 3.0 percent to a three-year intraday low.
Shares of JetBlue (JBLU) have plummeted after the airline reported third quarter results that fell short of analyst estimates.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index climbed by 0.5 percent, while Hong Kong’s Hang Seng Index tumbled by 1.7 percent.
Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has jumped by 1.0 percent, the German DAX Index is up by 0.5 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.
In the bond market, treasuries have pulled back off their early highs but continue to see modest strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.9 basis points at 4.856 percent.
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