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

(RTTNews) - Stocks showed a lack of direction throughout much of the trading day on Wednesday before ending the session mixed. The choppy trading came on the heels of the notable upward move that was seen during the previous session.

The major averages eventually closed on opposite sides of the unchanged line. While the Nasdaq rose 12.43 points or 0.3 percent to 4,165.61, the Dow fell 68.20 points or 0.4 percent to 16,462.74 and the S&P 500 edged down 0.39 points or less than a tenth of a percent to 1,837.49.

The lackluster performance on Wall Street came despite the release of a report from payroll processor ADP showing that private sector employment increased by more than expected in the month of December.

ADP said the private sector added 238,000 jobs in December following an upwardly revised increase of 229,000 jobs in November.

Economists had expected an increase of about 200,000 jobs compared to the addition of 215,000 jobs originally reported for the previous month.

While the data points to strength in the labor market, traders seemed reluctant to make any significant moves ahead of the release of the Labor Department's monthly jobs report on Friday.

Traders were waiting for the Labor Department report to confirm the ADP data, which is often seen as less reliable.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "We're not entirely convinced by the ADP's usefulness as a leading indicator of non-farm payrolls but, to the extent it can be trusted, it supports our existing forecast that the official figures will show a 200,000 gain."

Later in the trading day, the Federal Reserve released the minutes of its December meeting, although they did not provide much new information about the central bank's decision to scale back stimulus.

The minutes noted that a majority of meeting participants determined that the marginal efficacy of the Fed's asset purchases was likely declining

At the same time, many members said the Fed should proceed cautiously in order to prevent the move from being misinterpreted as a signal that policy accommodation will be withdrawn more quickly than anticipated.

Sector News

While many of the major sectors ended the day showing only modest moves, considerable strength was visible among semiconductor stocks. The Philadelphia Semiconductor Index rose by 1.6 percent, reaching its best closing level in over six years.

Micron (MU) helped lead the semiconductor sector higher, with the chipmaker jumping 9.9 percent after reporting better than expected first quarter results.

Airline stocks also turned in a strong performance, resulting in a 1.6 percent gain by the NYSE Arca Airline Index. The gain lifted the index to an eleven-year closing high.

Biotechnology and networking stocks also saw significant strength, contributing to the upward move by the tech-heavy Nasdaq.

Meanwhile, gold stocks came under pressure on the day, moving lower along with the price of the precious metal. With gold for February delivery sliding $4.10 to $1,225.50 an ounce, the NYSE Arca Gold Bugs Index dropped by 1.6 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 1.9 percent, while Hong Kong's Hang Seng Index jumped by 1.3 percent.

Meanwhile, the major European markets saw some weakness on the day. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the German DAX Index edged down by 0.1 percent and the French CAC 40 Index closed just below the unchanged line.

In the bond market, treasuries showed a notable move to the downside on the heels of the upbeat jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.6 basis points to 2.993 percent.

Looking Ahead

While a report on weekly jobless claims may attract some attention on Thursday, trading activity is likely to be somewhat subdued ahead of Friday's monthly jobs report.