Stocks Close Nearly Unchanged As Traders Take A Breather - U.S. Commentary

(RTTNews) - With traders taking a break following the volatility seen over the two previous sessions, stocks showed a lack of direction throughout the trading day on Wednesday.

The major averages spent the day lingering near the unchanged line before closing mixed. While the Nasdaq crept up 6.00 points or 0.1 percent to 4,357.97, the Dow dipped 35.70 points or 0.2 percent to 16,360.18 and the S&P 500 edged down 0.10 points or less than a tenth of a percent to 1,873.81.

The choppy trading on Wall Street came as traders seemed reluctant to make any significant moves after the markets saw big swings in response to the recent developments in Ukraine.

Uncertainty about the near-term outlook for the markets ahead of Friday's monthly jobs report helped keep traders on the sidelines.

Meanwhile, traders shrugged off disappointing reports on private sector employment and service sector activity due to the apparent impact of the winter weather.

Payroll processor ADP released a report early in the day showing that private sector employment rose by less than expected in the month of February.

ADP said the private sector added 139,000 jobs in February compared to economist estimates for an increase of about 155,000 jobs. The report also showed a downward revision to the job growth in the previous month.

Mark Zandi, chief economist of Moody's Analytics, noted that the bad winter weather weighed on payrolls but said job growth is expected to improve with warmer temperatures.

The Institute for Supply Management released a separate report showing that activity in the service sector grew at a slower rate in the month of February.

The ISM said its non-manufacturing index fell to 51.6 in February from 54.0 in January, although a reading above 50 indicates continued growth in the service sector. Economists had been expecting the index to edge down to 53.5.

Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee, said some of the respondents attributed the slowdown to the rough winter weather.

The Federal Reserve's Beige Book released later in the day said economic conditions continued to expand from January to early February but noted the severe winter weather negatively impacted some districts.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Gold stocks saw considerable strength, however, with the NYSE Arca Gold Bugs Index rising by 1.3 percent. The strength among gold stocks came amid a modest increase by the price of the precious metal.

Notable strength was also visible among banking stocks, as reflected by the 1.2 percent gain posted by the Dow Jones Banks Index. Bank of America (BAC) helped to lead the sector higher, jumping by 3.2 percent.

Meanwhile, tobacco stocks came under pressure on the day, dragging the NYSE Arca Tobacco Index down by 1.1 percent. The pullback by the index came after it surged up to a three-month closing high on Tuesday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. Japan's Nikkei 225 surged up by 1.2 percent, while Australia's All Ordinaries Index advanced by 0.8 percent. However, the Hong Kong and Chinese markets bucked the uptrend.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index edged down by 0.1 percent, the German DAX Index and the U.K.'s FTSE 100 Index fell by 0.5 percent and 0.7 percent, respectively.

In the bond market, treasuries showed a lack of direction for much of the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day up by less than a basis point at 2.698 percent.

Looking Ahead

Reports on weekly jobless claims, labor productivity, and factory orders may attract some attention on Thursday, although activity is likely to remain subdued ahead of Friday's jobs report.

On the earnings front, Costco (COST), Kroger (KR), and Staples (SPLS) are among the companies due to release their quarterly results before the start of trading on Thursday.