U.S. Stocks Turn Mixed After Seeing Early Weakness

After coming under pressure early in the session, stocks have turned mixed over the course of the trading day on Wednesday. While the Dow has climbed firmly into positive territory, the tech-heavy Nasdaq has recovered from its worst levels but remains notably lower.

Currently, the Dow is up 138.88 points or 0.4 percent at 31,530.40, but the Nasdaq is down 105.78 points or 0.8 percent at 13,253.00. After falling more than 30 points in early trading, the S&P 500 is down just 5.42 points or 0.1 percent at 3,864.87.

The mixed performance on Wall Street comes as traders keep a close eye on activity in the bond markets, which has been a key driver of trading in recent sessions.

Bond yields have shown a notable rebound, with the yield on the benchmark ten-year note jumping after moving lower over the three previous sessions.

Yields remain well off the highs set last week, but renewed concerns about the outlook for interest rates and inflation are weighing on highly-flying tech stocks.

Meanwhile, optimism about the coronavirus vaccine rollouts has helped prop up the markets after President Joe Biden said Tuesday the U.S. will have enough vaccine supply for every adult in America by the end of May.

Biden cited the emergency use authorization issued for Johnson & Johnson’s (JNJ) vaccine as well as a collaboration between J&J and Merck (MRK) to expand production of the single-dose vaccine.

On the U.S. economic front, payroll processor ADP released a report showing much weaker than expected private sector job growth in the month of February.

ADP said private sector employment rose by 117,000 jobs in February after climbing by an upwardly revised 195,000 jobs in January.

Economists had expected employment to increase by 177,000 jobs compared to the addition of 174,000 jobs originally reported for the previous month.

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

The Institute for Supply Management also released a report showing a slowdown in the pace of growth in U.S. service sector activity in the month of February

The ISM said its services PMI dropped to 55.3 in February from 58.7 in January, although a reading above 50 still indicates growth in the sector. Economists had expected the index to come in unchanged.

The pullback by the services PMI came after the index reached its highest level since hitting 58.8 in February of 2019.

Sector News

Gold stocks have climbed well off their worst levels of the day but continue to see significant weakness in mid-day trading, resulting in a 2.2 percent drop by the NYSE Arca Gold Bugs Index.

The weakness in the gold sector comes amid a decrease by the price of the precious metal, with gold for April delivery falling $16.30 to $1,717.30 an ounce.

Considerable weakness also remains visible among biotechnology and software stocks, which continues to weigh on the Nasdaq.

On the other hand, energy stocks have moved sharply higher on the day, as the price of crude oil for April delivery is jumping $1.61 to $61.36 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index is up by 2.9 percent, the Philadelphia Oil Service Index is up by 1.9 percent and the NYSE Arca Natural Gas Index is up by 1.5 percent.

Substantial strength has also emerged among banking stocks, as reflected by the 2.2 percent spike by the KBW Bank Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index rose by 0.5 percent, while China’s Shanghai Composite Index surged up by 2 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.9 percent, the French CAC 40 Index and the German DAX Index rose by 0.4 percent and 0.3 percent, respectively.

In the bond market, treasuries are giving back ground after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.4 basis points at 1.479 percent.

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