After ending the previous sessions sharply higher, stocks have given back ground during trading on Wednesday. With the pullback on the day, the major averages are extending the roller-coaster ride seen over the first few trading days of October.
Currently, the major averages are off their worst levels of the day but still firmly negative. The Dow is down 326.36 points or 1 percent at 33,988.31, the Nasdaq is down 78.91 points or 0.6 percent at 14,354.92 and the S&P 500 is down 36.29 points or 0.8 percent at 4,309.43.
Lingering concerns about inflation and the Federal Reserve scaling back stimulus have contributed to the pullback on Wall Street following the rebound seen in the previous session.
Traders are also keeping an eye on developments in Washington, where lawmakers currently remain at an impasse over raising the debt ceiling.
Treasury Secretary Janet Yellen has warned the U.S. could face a recession if Congress fails to raise the debt ceiling by October 18th.
“It would be catastrophic to not pay the government’s bills, for us to be in a position where we lacked the resources to pay the government’s bills,” Yellen said in an interview on CNBC. “I fully expect it would cause a recession as well.”
However, selling pressure is somewhat subdued following the release of a report from payroll processor ADP showing stronger than expected private sector job growth in the month of September.
ADP said private sector employment jumped by 568,000 jobs in September after rising by a downwardly revised 340,000 jobs in August.
Economists had expected private sector employment to climb by 428,000 jobs compared to the addition of 374,000 jobs originally reported for the previous month.
“The labor market recovery continues to make progress despite a marked slowdown from the 748,000 job pace in the second quarter,” said ADP chief economist Nela Richardson.
She added, “Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve, setting the stage for solid job gains in the coming months.”
On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.
Economists currently expect employment to increase by 488,000 jobs in September after rising by 235,000 jobs in August. The unemployment rate is expected to dip to 5.1 percent from 5.2 percent.
Energy stocks are seeing substantial weakness on the day, moving lower along with the price of crude oil. Crude for November delivery is tumbling $1.54 to $77.39 a barrel after a report showed an unexpected weekly increase in U.S. crude oil inventories.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 3.3 percent, the NYSE Arca Natural Gas Index is down by 2.4 percent and the NYSE Arca Oil Index is down by 2.2 percent.
Significant weakness is also visible among airline stocks, as reflected by the 3.1 percent slump by the NYSE Arca Airline Index.
JetBlue (JBLU) and American Airlines (AAL) are posting steep losses after Goldman Sachs downgraded its rating on the airlines to Neutral and Sell, respectively.
Steel, computer hardware and chemical stocks have also moved notably lower amid broad based weakness on Wall Street.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slumped by 1.1 percent, while Hong Kong’s Hang Seng Index slid by 0.6 percent.
The major European markets also moved to the downside on the day. While the German DAX Index plunged by 1.5 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index slumped by 1.3 percent and 1.2 percent, respectively.
In the bond market, treasuries have moved modestly higher over the course of the session after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 1.515 percent.
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