Stocks Close Mixed After Another Volatile Trading Day - U.S. Commentary

(RTTNews) - Stocks once again experienced considerable volatility over the course of the trading session on Wednesday. The major averages had difficulty sustaining any significant moves on the day before ending the session mixed.

After ending the previous session at its lowest closing level in well over a year, the Nasdaq climbed 14.83 points or 0.4 percent to 4,283.59. Meanwhile, the Dow fell 99.64 points or 0.6 percent to 15,914.74, and the S&P 500 edged down 0.35 points or less than a tenth of a percent to 1,851.86.

The continued choppy trading on Wall Street came as the price of crude oil once again showed wild swings as the day progressed.

After climbing as high as $29.22 a barrel, crude for March delivery ended the day down $0.49 at $27.45 a barrel. The price of oil plunged $1.75 to $27.94 a barrel in the previous session.

Crude oil prices initially benefited from an Energy Information Administration report showing an unexpected decrease in crude oil inventories in the week ended February 5th.

However, the price of oil pulled back shortly afterward, as the report also showed increases in gasoline and distillate fuel inventories as well as record high inventories at a key delivery point in Oklahoma.

Traders also kept an eye on Federal Reserve Chair Janet Yellen's semi-annual monetary policy report to the House Financial Services Committee.

In prepared remarks, Yellen stressed that monetary policy is not on a preset course and reiterated the oft-repeated statement that the path of the federal funds rate will depend on incoming data.

Yellen acknowledged financial conditions have recently become less supportive of growth, citing declines in equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar.

"These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market, although declines in longer-term interest rates and oil prices provide some offset," Yellen said.

She added, "Still, ongoing employment gains and faster wage growth should support the growth of real incomes and therefore consumer spending, and global economic growth should pick up over time, supported by highly accommodative monetary policies abroad."

Reflecting the outlook, Yellen said the Fed expects to raise interest rates only gradually, leading to a moderate expansion in economic activity in the coming years.

Despite the recent signs of global economy weakness, the Fed Chief said she does the not expect a situation where it is necessary to cut interest rates.

Meanwhile, a notable decline by shares of Disney (DIS) weighed on the Dow, with the entertainment giant tumbling by 3.8 percent despite reporting record first quarter earnings.

Sector News

Many of the major sectors ended the day showing only modest moves, although significant weakness emerged among oil service stocks. The Philadelphia Oil Service Index tumbled by 2.2 percent, adding to the 5.9 percent loss posted on Tuesday.

Bristow Group (BRS) and Tidewater (TDW) turned in two of the sector's worst performances amid the decrease by the price of crude oil.

Trucking stocks also came under pressure over the course of the session, dragging the Dow Jones Trucking Index down by 1.9 percent. The index turned lower after reaching a two-month intraday high in early trading.

Chemical, natural gas, and financial stocks also saw notable weakness, while strength was visible among gold, airline, and internet stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 2.3 percent, while Australia's All Ordinaries Index slumped by 1.2 percent. Some of the major markets remained closed for holidays.

Meanwhile, the major European markets moved back to the upside following recent weakness. While the U.K.'s FTSE 100 Index advanced by 0.7 percent, the German DAX Index and the French CAC 40 Index both jumped by 1.6 percent.

In the bond market, treasuries turned higher over the course of the session after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.4 basis points to 1.705 percent after reaching a high of 1.769 percent.

Looking Ahead

Yellen's second day of Congressional testimony typically mirrors her first, but traders are still likely to keep an eye on her appearance before the Senate Banking Committee on Thursday.

The Labor Department is also scheduled to release its report on initial jobless claims in the week ended February 6th.

On the earnings front, Cisco Systems (CSCO), Expedia (EXPE), Tesla (TSLA), and Twitter (TWTR) are among the companies due to release their quarterly results after the close of today's trading.

Kellogg (K), Molson Coors (TAP), and PepsiCo (PEP) are also scheduled to release their results before the start of trading on Thursday.