Stocks Pull Back Well Off Highs To End The Session Mixed - U.S. Commentary

(RTTNews) - After showing a strong move to the upside in early trading, stocks gave back some ground over the course of the trading day on Wednesday. The major averages pulled back well off their highs for the session and eventually closed mixed.

The tech-heavy Nasdaq remained firmly positive throughout the session before closing up 34.40 points or 0.7 percent at 5,139.94. The S&P 500 also rose 6.52 points or 0.3 percent to 2,099.84, while the Dow edged down 10.22 points or 0.1 percent to 17,540.47.

The early strength on Wall Street partly reflected easing concerns about the outlook for interest rates after a report from payroll processor ADP showed that the pace of private sector job growth slowed by more than expected in July.

ADP said private sector employment climbed by 185,000 jobs in July following a downwardly revised increase of 229,000 jobs in June. Economists had expected an increase of about 215,000 jobs.

Positive sentiment was also generated by comments from Federal Reserve Governor Jerome Powell, who told CNBC he has not yet made up his mind on whether rates should be raised next month.

"Nothing has been decided and I haven't made any decisions of what I would support and certainly the committee hasn't," Powell said. "I'm going to be very focused on the data from now until the meeting, particularly the labor market data."

Friday morning, the Labor Department is scheduled to release its closely watched monthly employment report, which includes both public and private sector jobs.

However, the waning concerns about interest rates were partly stirred back up by a report from the Institute for Supply Management showing that service sector activity expanded at a significantly faster rate in the month of July.

The ISM said its non-manufacturing index jumped to 60.3 in July from 56.0 in June, with a reading above 50 indicating growth in the service sector. Economists had expected the index inch up to 56.2.

A notable decline by shares of Disney (DIS) also weighed on the Dow, as the entertainment giant plunged by 9.2 percent after reporting weaker than expected third quarter revenues.

Sector News

While many sectors ended the session off their early highs, strength among technology stocks helped to keep the Nasdaq firmly in positive territory.

Networking stocks turned in some of the tech sector's best performances, driving the NYSE Arca Networking Index up by 1.6 percent. With the gain, the index ended the session at its best closing level in well over a month.

Electronic storage, internet, and semiconductor stocks also ended the session notably higher but well off their best levels of the day.

On the other hand, gold stocks moved sharply lower over the course of the trading day, dragging the NYSE Arca Gold Bugs Index down by 2.3 percent. The weakness in the sector came as gold for December delivery fell $5.10 to $1,085.60 an ounce.

Significant weakness also emerged among natural gas stocks, with the NYSE Arca Natural Gas Index tumbling by 2.3 percent to its lowest closing level in well over three years.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.5 percent, while China's Shanghai Composite Index dropped by 1.7 percent.

Meanwhile, the major European markets all moved higher on the day. While the U.K.'s FTSE 100 Index advanced by 1 percent, the German DAX Index and the French CAC 40 Index jumped by 1.6 percent and 1.7 percent, respectively.

In the bond market, treasuries came under pressure, pulling back further off their recent highs. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.7 basis points to 2.268 percent.

Looking Ahead

A report on initial jobless claims is likely to attract some attention on Thursday, although traders may stay on the sidelines ahead of the monthly jobs report due on Friday.

On the earnings front, CBS Corp. (CBS), Prudential (PRU), Tesla Motors (TSLA) and Weight Watchers (WTW) are among the companies releasing their quarterly results after the close of today's trading.