Stocks Close Mixed Following Lackluster Session - U.S. Commentary

(RTTNews) - After ending the previous session mostly lower, stocks showed a lack of direction throughout much of the trading day on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day mixed. While the Dow edged down 22.05 points or 0.1 percent to 19,804.72, the Nasdaq rose 16.93 points or 0.3 percent to 5,555.65 and the S&P 500 crept up 4.00 points or 0.2 percent to 2,271.89.

The choppy trading on Wall Street was partly due to uncertainty about President-elect Donald Trump's policies ahead of his inauguration on Friday.

Trump's surprise victory initially triggered a rally on Wall Street, but traders have recently seemed reluctant to make significant moves as they wait to see what he will actually do once officially sworn in.

Traders were also digesting a batch of closely watched economic data, including a report from the Labor Department showing that consumer prices rose in line with estimates in December.

The Labor Department said its consumer price index rose by 0.3 percent in December after edging up by 0.2 percent in November.

Excluding food and energy prices, the core consumer price index crept up by 0.2 percent for the second consecutive month. The uptick in core prices also matched economist estimates.

The report also showed an acceleration in the annual rate of consumer price growth, supporting expectations for further interest rate hikes by the Federal Reserve this year.

A separate report from the Fed showed a rebound in industrial production in December, with the increase primarily reflecting a jump in utilities output.

The Fed said industrial production climbed by 0.8 percent in December after slumping by a revised 0.7 percent in November. Economists had expected production to increase by 0.6 percent

Meanwhile, the National Association of Realtors released a report showing a modest pullback in homebuilder confidence in the month of January.

The report said the NAHB/Wells Fargo Housing Market Index dipped to 67 in January after jumping to an eleven-year high of 69 in December.

Stocks continued to show a lack of direction following the release of the Federal Reserve's Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

The Beige Book said reports from the twelve districts indicated that the economy continued to expand at a modest pace across most regions from late November through the end of the year.

The Fed also said labor markets were reported to be tight or tightening during the period while noting that pricing pressures intensified somewhat since the last report.

Traders also largely shrugged off remarks by Fed Chair Janet Yellen, who said the economy is close to the central bank's dual mandate but said she could not predict when the next interest rate hike is coming or how high rates will rise.

Sector News

Many of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Steel stocks showed a strong move to the upside, however, with the NYSE Arca Steel Index surging up by 2.2 percent. With the gain, the index reached its best closing level in well over a month.

The strength among steel stocks was partly due to comments from Commerce Secretary nominee Wilbur Ross, who suggested the U.S. could levy tariffs on countries that sell commodities such as steel and aluminum at dumping prices.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.4 percent gain posted by the Philadelphia Semiconductor Index. ASML (ASML) posted a standout gain after reporting better than expected fourth quarter results.

Electronic storage, tobacco, and biotechnology stocks also saw notable strength on the day, while gold stocks came under pressure amid a modest decrease by the price of the precious metal.

Other Markets

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 0.4 percent, while Australia's All Ordinaries Index fell by 0.4 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index edged down by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index climbed by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries moved to the downside, offsetting the strength seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.2 basis points to 2.389 percent.

Looking Ahead

Another batch of economic data is scheduled to be released on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, housing starts, and Philadelphia-area manufacturing activity.

Earnings news is also likely to attract attention, with video streaming service Netflix (NFLX) among the companies releasing their quarterly results after the close of today's trading.

KeyCorp (KEY), M&T Bank (MTB), and Union Pacific (UNP) are also due to report their results before the start of trading on Thursday.