Stocks Give Back Ground Following Early Upward Move - U.S. Commentary

(RTTNews) - After failing to sustain an early upward move, stocks have given back ground over the course of the trading day on Wednesday. The major averages have pulled back well off their highs for the session and briefly dipped into negative territory.

Currently, the major averages are posting modest gains on the day. The Dow is up 52.12 points or 0.3 percent at 17,439.33, the Nasdaq is up 15.89 points or 0.3 percent at 4,697.38 and the S&P 500 is up 1.89 points or 0.1 percent at 2,031.44.

The early strength on Wall Street largely reflected a positive reaction to the latest batch of earnings news, with Apple (AAPL) helping to lead the markets higher.

Shares of Apple currently remain up by 7.2 percent after the tech giant reported first quarter earnings and revenues that were well ahead of expectations on strong iPhone sales.

Other well-known companies such as Electronic Arts (EA), Tupperware (TUP), and Boeing (BA) also reacted positively to their quarterly results.

Buying interest waned not long after the open, however, as traders seemed reluctant to make significant moves ahead of the Federal Reserve's monetary policy announcement this afternoon.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to keep a close eye on any changes to the accompanying statement.

Peter Boockvar, managing director at the Lindsey Group, said, "The bottom line is whether they continue to look past the drop in commodity prices and its downward influence on the inflation stats and focus more on what is fast becoming full employment."

"With the U3 rate at 5.6%, we are just a few tenths from what the Fed currently believes is the non-accelerating inflation rate of unemployment," he added.

The subsequent pullback by the major averages partly reflected a notable decrease by the price of crude oil, with crude for March delivery tumbling $1.10 to $45.13 a barrel.

Sector News

Despite the strength currently being shown by the broader markets, most of the major sectors are showing only modest moves.

While some strength remains visible among computer hardware, semiconductor, and networking stocks, most have pulled back well off their early highs.

On the other hand, significant weakness has emerged among energy stocks, which are moving lower along with the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index are plummeting by 4.2 percent and 2.8 percent, respectively.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Wednesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both edged up by 0.2 percent, while China's Shanghai Composite Index tumbled by 1.4 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index dipped by 0.3 percent, the U.K.'s FTSE 100 Index inched up by 0.2 percent and the German DAX Index advanced by 0.8 percent.

In the bond market, treasuries are seeing modest strength ahead of the Fed's policy announcement. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.9 basis points at 1.806 percent.