U.S. Stocks Close Mostly Lower Following Another Choppy Session

Following the lackluster performance seen in the previous session, stocks continued to experience choppy trading on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the Dow ended the day up 5.14 points or less than a tenth of a percent at 32,661.84, while the Nasdaq slid 76.06 points or 0.7 percent to 11,379.48 and the S&P 500 fell 18.76 points or 0.5 percent at 3,951.39.

The choppy trading on Wall Street came following the release of a report from the Institute for Supply Management on U.S. manufacturing activity in the month of February.

While the ISM said its manufacturing PMI inched up to 47.7 in February from 47.4 in January, a reading below 50 still indicates a contraction. Economists had expected the index to edge up to 48.0.

The report also showed the prices index jumped to 51.3 in February from 44.5 in January, indicating raw materials prices increased after decreasing for four consecutive months.

“Overall, there is little sign that the recent improvements in manufacturing activity in other economies, particularly China, is being reflected in the U.S.,” said Andrew Hunter, Deputy Chief U.S. Economist at Capital Economics. “The ISM index is also still loosely consistent, on past form, with negative GDP growth.”

The notable rebound by the prices index may have added to recent concerns about inflation and the outlook for interest rates.

Treasury yields jumped following the release of the report, with the ten-year yield reaching its highest levels in over three months.

Sector News

Interest rate-sensitive utilities stocks showed a significant move to the downside, dragging the Dow Jones Utility Average down by 1.8 percent to its lowest closing level in over three months.

Considerable weakness was also visible among retail stocks, as reflected by the 1.8 percent slump by the Dow Jones U.S. Retail Index.

Home improvement retailer Lowe’s (LOW) posted a steep loss after reporting fourth quarter sales that missed analyst estimates.

Telecom and commercial real estate stocks also saw notable weakness on the day, while steel, energy and gold stocks moved sharply higher.

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 0.3 percent, while Hong Kong’s Hang Seng Index soared by 4.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index climbed by 0.5 percent, the German DAX Index and the French CAC 40 Index fell by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries pulled back sharply after moving modestly higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 7.8 basis points to 3.994 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to a report on weekly jobless claims, which could provide additional clues about tightness in the labor market.

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