Stocks Close Firmly Negative Amid Falling Commodities Prices - U.S. Commentary

(RTTNews) - After ending the previous session mixed, stocks moved mostly lower over the course of the trading session on Wednesday. With the drop on the day, the Nasdaq gave back ground after ending the previous session at its best closing level in well over two months.

The major averages all closed in the red, although the Nasdaq underperformed its counterparts. While the Nasdaq slid 52.80 points or 1.1 percent to 4,768.86, the Dow fell 79.98 points or 0.5 percent to 17,502.59 and the S&P 500 dropped 13.09 points or 0.6 percent to 2,036.71.

Resource stocks helped to lead the way lower on Wall Street, with a drop in commodities prices generating considerable selling pressure.

A steep drop by the price of crude oil weighed on the energy sector, with crude for May delivery tumbling $1.66 to $39.79 a barrel.

The price of crude oil came under pressure following the release of a report from the Energy Information Administration showing a sharp jump in weekly crude oil inventories.

The EIA said crude oil inventories surged up by 9.4 million barrels in the week ended March 18th, reaching historically high levels for this time of year. Economists had expected an increase of about 3.1 million barrels.

While the report also said distillate fuel inventories edged up by 0.9 million barrels last week, gasoline inventories slumped by 4.6 million barrels.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index slumped by 4 percent, while the Philadelphia Oil Service Index and the NYSE Arca Oil & Gas Index slid 2.8 percent and 2.6 percent, respectively.

Substantial weakness was also visible among gold stocks, which moved sharply lower along with the price of the precious metal.

With gold for April delivery plummeting $24.60 to $1,224 an ounce amid strength in the value of the U.S. dollar, the NYSE Arca Gold Bugs Index plunged by 7.4 percent.

Outside out of the resource space, electronic storage, biotechnology, and networking stocks also saw significant weakness on the day.

In U.S. economic news, the Commerce Department released a report this morning showing a rebound in new home sales in the month of February.

The report said new home sales rose 2.0 percent to an annual rate of 512,000 in February after tumbling 7.0 percent to a revised rate of 502,000 in January.

Economists had expected new home sales to climb 3.2 percent to a rate of 510,000 from the 494,000 originally reported for the previous month.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both fell by 0.3 percent. However, China's Shanghai Composite Index bucked the downtrend and climbed by 0.4 percent.

Meanwhile, the major European markets turned in a mixed performance the day. While the French CAC 40 Index edged down by 0.2 percent, the U.K.'s FTSE 100 Index inched up by 0.1 percent and the German DAX Index rose by 0.3 percent.

In the bond market, treasuries moved back to the upside after turning lower over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6 basis points to 1.875 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to a pair of economic reports on durable goods orders and weekly jobless claims.

Activity may be somewhat subdued, however, as some traders may look to get a head start on the long Easter weekend.