Profit Taking Contributes To Lower Close On Wall Street - U.S. Commentary

(RTTNews) - After moving modestly higher in morning trading, stocks showed a substantial move to the downside over the course of the trading day on Wednesday. The major averages pulled back well off their highs for the session, sliding firmly into negative territory.

The major averages saw further downside in the final hour of trading, closing near their worst levels of the day. The Dow tumbled 153.49 points or 0.9 percent to 16,461.32, the Nasdaq slid 36.63 points or 0.8 percent to 4,382.85 and the S&P 500 dropped 14.17 points or 0.7 percent to 1,927.11.

The pullback by stocks was partly due to profit taking following a recent upward move, with the Nasdaq and the S&P 500 giving back ground after closing higher for four straight sessions.

News that a Canadian soldier was killed in a shooting at the Canadian Parliament complex in Ottawa was also cited as a reason for the downturn by the markets.

Meanwhile, the Labor Department released a report before the start of trading showing an unexpected uptick in consumer prices in the month of September.

The Labor Department said its consumer price index edged up by 0.1 percent in September following a 0.2 percent drop in August. The modest increase came as a surprise to economists, who had expected prices to come in unchanged.

The unexpected increase in consumer prices reflected higher prices for food and shelter, which offset a continued decline in energy prices.

Excluding food and energy prices, the core consumer price index inched up by 0.1 percent in September after coming in unchanged in the previous month. The increase matched economist estimates.

Among individual stocks, shares of Cree (CREE) fell sharply after the LED manufacturer reported first quarter results that missed estimates and provided disappointing second quarter guidance.

Aerospace giant Boeing (BA) also came under pressure despite reporting better than expected third quarter earnings and raising its full-year guidance.

Meanwhile, shares of Yahoo! (YHOO) closed notably higher after the online media giant reported third quarter results that exceeded analyst estimates.

Sector News

Gold stocks moved sharply lower over the course of the session, dragging the NYSE Arca Gold Bugs Index down by 3.2 percent. With the loss, the index ended the session at its worst closing level in almost six years.

The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery falling $6.20 to $1,245.50 an ounce.

Substantial weakness also emerged among oil service stocks, as reflected by the 3.1 percent loss posted by the Philadelphia Oil Service Index. Crude for December delivery tumbled $1.97 to $80.52 a barrel, contributing to the weakness in the sector.

Transportation stocks also came under pressure on the day after rising sharply in recent sessions. The Dow Jones Transportation Average dropped by 2.1 percent after ending the previous session at its best closing level in almost a month.

Natural gas, networking, brokerage, and software stocks also saw notable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 surged up by 2.6 percent, while Hong Kong's Hang Seng Index jumped by 1.4 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index and the German DAX Index both advanced by 0.6 percent.

In the bond market, treasuries moved modestly lower, extending the recent pullback off last week's highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.1 basis points to 2.229 percent.

Looking Ahead

AT&T (T), Citrix Systems (CTXS) and Yelp (YELP) are among the companies releasing their quarterly results after the close of today's trading, while 3M (MMM), Caterpillar (CAT), General Motors (GM), and United Continental (UAL) are due to report their results before the start of trading on Thursday.

Thursday's trading may also be impacted by the release of the weekly jobless claims report as well as a report on leading economic indicators.