Stocks Come Under Pressure After Moving Higher At The Open - U.S. Commentary

(RTTNews) - After moving modestly higher at the open, stocks have once again come under pressure over the course of the trading day on Wednesday. With the downturn on the day, the Nasdaq is pulling back further off the fifteen-year closing high it set last Friday.

Currently, the major averages are lingering near their worst levels of the day. The Dow is down 163.35 points or 0.9 percent at 17,847.79, the Nasdaq is down 71.48 points or 1.4 percent at 4,923.24 and the S&P 500 is down 15.14 points or 0.7 percent at 2,076.36.

The weakness that has emerged on Wall Street comes following the release of a report from the Commerce Department showing an unexpected drop in durable goods orders in the month of February.

The report said durable goods orders fell by 1.4 percent in February following a downwardly revised 2.0 percent increase in January. The drop came as a surprise to economists, who had expected orders to climb by 0.7 percent.

Excluding a 3.5 percent drop in orders for transportation equipment, durable goods orders still fell by 0.4 percent in February.

The report also showed a 1.4 percent drop in orders for non-defense capital goods excluding aircraft, an indicator of capital spending.

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, the softness in capital spending is more than just from the oil and gas industry and the core cap-ex component on an absolute spending level is at the lowest level since May 2014."

"I understand why the Fed is so reluctant to raise rates in the face of soft economic data, but I also know that zero rates has resulted in corporate behavior that is more interested in short term fixes to the stock price rather than long term thinking on investment," he added.

The report extends a recent string of largely disappointing economic data, although most analysts continue to expect the Federal Reserve to raise interest rates in the near future.

Boockvar noted that traders continue to focus on the outlook for monetary policy rather than whether the policy has been effective in helping the economy.

Sector News

Semiconductor stocks have shown a substantial move to the downside on the day, contributing to the steep loss being posted by the tech-heavy Nasdaq. Reflecting the weakness in the sector, the Philadelphia Semiconductor Index is plunging by 3.5 percent.

Skyworks Solutions (SWKS), Lam Research (LRCX), and Avago Technologies (AVGO) are turning in some of the semiconductor sector's worst performances.

Considerable weakness is also visible among biotechnology stocks, as reflected by the 3.1 percent loss being posted by the NYSE Arca Biotechnology Index. With the drop, the index is pulling back further off the record intraday high that it set last Friday.

Software, airline, and internet stocks are also seeing significant weakness in mid-day trading, moving lower along with most of the other major sectors.

On the other hand, energy stocks are seeing continued strength amid an increase by the price of crude oil. Crude for May delivery is currently climbing $0.84 to $48.35 a barrel.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Wednesday. Japan's Nikkei 225 Index edged up by 0.2 percent, while China's Shanghai Composite Index slumped by 0.8 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.4 percent, the German DAX Index is down by 1 percent and the French CAC 40 Index is down by 1.3 percent.

In the bond market, treasuries have moved modestly lower after trending higher over the past few weeks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.1 basis points at 1.889 percent.