Stocks Close Modestly Lower Following Choppy Trading Day - U.S. Commentary

(RTTNews) - After ending the previous session sharply lower, stocks showed a lack of direction throughout much of the trading day on Wednesday. The major averages spent the session bouncing back and forth across the unchanged line.

At the end of the day, the major averages were posting modest losses. The Dow dipped 50.58 points or 0.3 percent to 16,279.89, the Nasdaq edged down 3.98 points or 0.1 percent to 4,75274 and the S&P 500 slipped 3.98 points or 0.2 percent to 1,938.76.

The choppy trading on Wall Street partly reflected continued uncertainty about the outlook for U.S. monetary policy following last week's Federal Reserve decision.

The Fed's decision to leave interest rates unchanged has raised questions about when the central bank will eventually raise rates.

Some analysts believe the Fed will hike rates at a meeting next month, while others expect the rate increase to be delayed until at least December.

A lack of major U.S. economic data may also have kept traders on the sidelines ahead of the release of reports on durable goods orders and new home sales on Thursday.

Among individual stocks, shares of First Niagara (FNFG) closed sharply higher after reports said the regional bank has hired JPMorgan to evaluate strategic alternatives, including a possible sale.

Real estate investment trust Biomed Realty (BMR) also posted a standout gain after reports said the company is also in talks to sell itself.

On the other hand, shares of Copart (CPRT) moved to the downside even though the provider of online vehicle auction and remarketing services reported better than expected fourth quarter results.

Sector News

Many of the major sectors ended the day showing only modest moves, although substantial weakness was visible among steel stocks. The NYSE Arca Steel Index plunged by 3.4 percent to its lowest closing level in well over six years.

The weakness among steel stocks came amid concerns about global demand following the release of disappointing Chinese manufacturing data.

Natural gas stocks also saw significant weakness on the day, resulting in a 2.5 percent drop by the NYSE Arca Natural Gas Index. Southwestern Energy (SWN) and Chesapeake Energy (CHK) posted steep losses.

Chemical, electronic storage and gold stocks also showed notable moves to the downside, while some strength was visible among commercial real estate stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness on Wednesday. Hong Kong's Hang Seng Index plummeted by 2.3 percent, while Australia's All Ordinaries Index slumped by 1.9 percent. The Japanese markets remained closed for a third straight day.

Meanwhile, the major European markets ended the day higher but well off their best levels. While the U.K.'s FTSE 100 Index surged up by 1.6 percent, the German DAX Index rose by 0.4 percent and the French CAC 40 Index inched up by 0.1 percent.

In the bond market, treasuries regained ground after seeing initial weakness but still close modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.9 basis points to 2.144 percent.

Looking Ahead

Trading on Thursday is likely to be driven by reaction to reports on weekly jobless claims, durable goods orders, and new home sales, which could impact the outlook for interest rates.