After ending the previous session sharply lower, stocks fluctuated over the course of the trading session on Wednesday. The major averages eventually ended the session mixed, with the tech-heavy Nasdaq edging down to a new two-month closing low.
The Dow and the S&P 500 came under pressure going into the close but held on to modest gains. While the Nasdaq dipped 34.24 points or 0.2 percent to 14,512.44, the Dow rose 90.73 points or 0.3 percent to 34,390.72 and the S&P 500 inched up 6.83 points or 0.2 percent to 4,359.46.
The volatility on Wall Street came as traders kept a close eye on the bond markets following the recent surge by treasury yields.
Stocks initially benefited from a pullback by yields, which inspired traders to go bargain hunting following the sell-off seen on Tuesday.
However, yields moved slightly higher over the course of the session, with the ten-year yield reaching a new three-month closing high.
The turnaround by yields came after Federal Reserve Chair Jerome Powell warned inflation could be held up longer than previously thought due to supply chain problems.
“The current inflation spike is really a consequence of supply constraints meeting very strong demand, and that is all associated with the reopening of the economy, which is a process that will have a beginning, a middle and an end,” Powell said during a virtual forum with other central bank leaders
“We see those things resolving,” he added but noted, “It’s very difficult to say how big those effects will be in the meantime or how long they will last.”
Treasuries have been trending lower since the Fed signaled last week that it is likely to begin scaling back its asset purchases in the near future.
On the U.S. economic front, the National Association of Realtors released a report showing pending home sales skyrocketed by much more than expected in the month of August.
Gold stocks moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 2.5 percent to its lowest closing level in well over a year.
The sell-off by gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery sliding $14.60 to $1,722.90 an ounce.
Computer hardware and semiconductor stocks also saw considerable weakness on the day, contributing to the drop by the tech-heavy Nasdaq.
Micron Technology (MU) came under pressure after the chipmaker reported better than expected fiscal fourth quarter results by provided disappointing guidance.
On the other hand, interest rate-sensitive utilities stocks turned in a strong performance, driving the Dow Jones Utilities Average up by 1.4 percent. The average ended the previous session at a six-month closing low.
Notable strength was also visible among pharmaceutical stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Pharmaceutical Index. The index bounced off its lowest closing level in three months.
Drugmaker Eli Lilly (LLY) posted a strong gain after Citi upgraded its rating on the company’s stock to Buy from Neutral.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index plummeted by 2.1 percent, while China’s Shanghai Composite Index dove by 1.8 percent.
Meanwhile, the major European markets moved to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1.1 percent, the French CAC 40 Index and the German DAX Index both advanced by 0.8 percent.
In the bond market, treasuries moved slightly lower over the course of the session after seeing early strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is inched up by less than a basis point to 1.541 percent.
A report on weekly jobless claims may attract attention on Thursday along with another day of Congressional testimony by Fed Chair Jerome Powell.
Source: Read Full Article