Stocks Close Mostly Lower But Well Off Worst Levels - U.S. Commentary

(RTTNews) - Stocks moved mostly lower over the course of the trading day on Wednesday, extending the pullback seen in the previous session. With the losses over the past two days, the major averages offset the rally seen on Monday.

The major averages ended the day in negative territory but well off their lows for the session. The Dow slid 77.94 points or 0.4 percent to 17,698.18, the Nasdaq dropped 20.66 points or 0.4 percent to 4,880.23 and the S&P 500 fell 8.20 points or 0.4 percent to 2,059.69.

The weakness on Wall Street was partly due to the release of some disappointing economic data, including a report from payroll processor ADP showing a continued slowdown in the pace of private sector job growth.

ADP said private sector employment climbed by 189,000 jobs in March following a slightly upwardly revised increase of 214,000 jobs in February. Economists had expected an increase of about 230,000 jobs.

With the continued slowdown, the pace of private sector job growth came in below 200,000 for the first time since January of last year.

Mark Zandi, chief economist of Moody's Analytics, said, "Job growth took a step back in March. The fallout from the collapse in oil prices and surge in value of the dollar is hitting the job market."

A separate report from the Institute for Supply Management showed that the pace of growth in manufacturing activity slowed by more than anticipated.

The ISM said its purchasing managers index dropped by 1.4 points to 51.5 in March after edging down 0.6 points to 52.9 in February.

While a reading above 50 indicates continued growth in manufacturing activity, economists had expected the index to show a more modest drop to 52.5.

The reports added to recent concerns about the economy, although selling pressure waned due in part to optimism that the data may lead the Federal Reserve to delay an increase in interest rates.

Sector News

While many of the major sectors ended the day showing only modest weakness, airline stocks showed a substantial move to the downside on the day. Reflecting the weakness in the airline sector, the NYSE Arca Airline Index dropped by 2.2 percent.

The weakness in the airline sector came after Deutsche Bank downgraded its rating on Delta (DAL), United Continental (UAL), and American Airlines (AAL) to Hold from Buy.

Considerable weakness was also visible among health care stocks, as reflected by the 1.2 percent loss posted by the Dow Jones Health Care Index. PharMerica (PMC) and Universal Health Services (UHS) posted notable losses.

Biotechnology, steel, and trucking stocks also came under pressure on the day, while gold stocks moved sharply higher along with the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index dropped by 0.9 percent, while Hong Kong's Hang Seng Index advanced by 0.7 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index rose by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index climbed by 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries moved notably higher on the heels of the disappointing economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.6 basis points to 1.868 percent.

Looking Ahead

Economic data is likely to remain in focus on Thursday, as traders will be presented with reports on weekly jobless claims, international trade, and factory orders.

Trading activity may be somewhat subdued, however, as some investors may look to get a head start on the long holiday weekend.