U.S. Stocks Turn Negative As Early Buying Interest Fades
After showing a strong move to the upside early in the session, stocks have once again succumbed to selling pressure over the course of the trading day on Wednesday. The major averages pulled back well off their highs of the session and into negative territory.
Currently, the major averages are turning in a mixed performance, as the Nasdaq has crept back above the unchanged line. While the Nasdaq is up 3.50 points or less than a tenth of a percent at 9,969.12, the Dow is down 118.32 points or 0.4 percent at 26,963.04 and the S&P 500 is down 10.72 points or 0.3 percent at 3,117.49.
Traders went bargain hunting early in the day, attempting to spark a rebound on Wall Street after stocks failed to sustain an initial upward move on Tuesday and pulled back sharply as the session progressed.
Yesterday’s steep drop saw the Dow slump to its lowest closing level in nearly four months, while the Nasdaq and the S&P 500 tumbled to their lowest closing levels in nearly two months and three months, respectively.
Nonetheless, lingering concerns about the coronavirus outbreak escalating into a pandemic that substantially slows global economic growth kept buying interest somewhat subdued.
Traders subsequently cashed in on the early strength on Wall Street, leading to another pullback by the broader markets.
The pullback by stocks coincided with a rebound by treasuries, which have recovered from an early move to the downside and climbed into positive territory.
As a result of the rebound by treasuries, the yield on the benchmark ten-year note is poised to end the session at a new record closing low.
The Trump administration has sought to downplay concerns about the coronavirus, with President Donald Trump accusing the media of exaggerating the situation in order to panic the markets.
Trump said in a post on Twitter this morning that he will be holding a press conference on the coronavirus with CDC representatives and others at 6 pm ET.
Meanwhile, traders have largely shrugged off a Commerce Department report showing new home sales jumped to their highest level in over twelve years in the month of January.
The report said new home sales spiked by 7.9 percent to an annual rate of 764,000 in January after jumping by 2.3 percent to an upwardly revised rate of 708,000 in December.
Economists had expected new home sales to surge up by 2.3 percent to an annual rate of 710,000 from the 694,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 778,000 in July of 2007.
Energy stocks have helped to lead the way back to the downside, with another steep drop by the price of crude oil weighing on the day. Crude for April delivery is tumbling $1.08 to $48.82 a barrel, moving lower for the fourth straight session.
Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index has plunged by 4 percent, the Philadelphia Oil Service Index is down by 3 percent and the NYSE Arca Oil Index is down by 2.5 percent.
Significant weakness is also visible among housing stocks, as reflected by the 2.2 percent slump by the Philadelphia Housing Sector Index. The index is on pace to end the session at its lowest closing level in over four months.
Toll Brothers (TOL) is posting a steep loss after the luxury home builder reported fiscal first quarter results that missed analyst estimates on both the top and bottom lines.
Transportation and banking stocks have also come under pressure over the course of the session, while tobacco stocks continue to see considerable strength on the day.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index and China’s Shanghai Composite Index both slid by 0.8 percent, while Australia’s S&P/ASX 200 Index tumbled by 2.3 percent.
Meanwhile, the major European markets turned mixed after coming under pressure earlier in the day. While the German DAX Index edged down by 0.1 percent, the French CAC 40 Index crept up by 0.1 percent and the U.K.’s FTSE 100 Index rose by 0.4 percent.
In the bond market, treasuries have turned higher over the course of the session after an early pullback. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.1 basis points at 1.319 percent.
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