Stocks Move Modestly Lower In Early Trading - U.S. Commentary

(RTTNews) - After moving to the downside at the open, stocks continue to see modest weakness in early trading on Wednesday. The major averages have all slid into negative territory after ending the previous session nearly unchanged.

Currently, the major averages remain in the red but have climbed off their lows for the young session. The Dow is down 68.32 points or 0.4 percent at 16,877.60, the Nasdaq is down 4.92 points or 0.1 percent at 4,333.08 and the S&P 500 is down 5.47 points or 0.3 percent at 1,945.32.

The early weakness on Wall Street is partly due to news that the World Bank lowered its global economic growth forecast for 2014.

Citing poor weather in the U.S., financial market turbulence and the Ukrainian crisis, the World Bank said it now expects the global economy to grow by 2.8 percent in 2014 compared to its previous forecast for 3.2 percent growth.

At the same time, the World Bank left its growth forecasts for 2015 and 2016 broadly unchanged at 3.4 percent and 3.5 percent, respectively.

Some traders have also taken the opportunity to cash in the on the recent strength in the markets, which lifted the Dow and the S&P 500 to record highs and the Nasdaq to its best levels in three months.

Peter Boockvar, chief market analyst at the Lindsey Group, noted that a survey by Investors Intelligence showed bullish sentiment among financial advisors at a level than often precedes sizable corrections.

"Thus, if history is any guide, we're either on the cusp of a bear market or a trading range market for 6-12 months rather than further gains of substance," Boockvar said.

He added, "Most of the time sentiment doesn't say much about short term performance but when the spread between bulls and bears gets this wide, it's historically noteworthy and foolhardy to ignore."

However, it is worth noting that stocks have not seen much follow-through on their recent pullback attempts, with the markets often recovering after an initial move to the downside.

Airline stocks are seeing significant weakness in early trading, with the NYSE Arca Airline Index down by 1.8 percent. With the loss, the index continues to pull back off the off the twelve-year closing high that it set last Friday.

Brokerage, defense, and housing stocks are also seeing early weakness, while most of the other major sectors have shown more modest moves to the downside.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index dipped by 0.3 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index has fallen by 0.8 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both down by 0.5 percent.

In the bond market, treasuries are seeing modest strength after trending lower over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.1 basis points at 2.624 percent.