Stocks Give Back Ground Following Recent Upward Trend - U.S. Commentary

(RTTNews) - Stocks moved mostly lower during trading on Wednesday, giving back some ground after trending higher over the past several sessions. Selling pressure was relatively subdued, however, limiting the downside for the markets.

The major averages all closed in the red, although the tech-heavy Nasdaq underperformed its counterparts by a wide margin. While the Nasdaq slid 34.49 points or 0.8 percent to 4,126.97, the Dow edged down 12.72 points or 0.1 percent to 16,502.65 and the S&P 500 dipped 4.16 points or 0.2 percent to 1,875.39.

The weakness on Wall Street was partly due to profit taking following the recent upward move, with the Nasdaq and the S&P 500 moving back to the downside after closing higher for six consecutive sessions.

Traders were also reacting to the latest batch of earnings news, including quarterly results from big-name companies such as AT&T (T), Procter & Gamble (PG), and Dow Chemical (DOW).

Shares of AT&T dropped by 3.8 percent even though the telecom giant reported better than expected first quarter results. Traders seemed disappointed that the company raised its full-year revenue growth target but left its earnings guidance unchanged.

Consumer products giant Procter & Gamble posted a more modest loss after reporting an unexpected drop in fiscal third quarter net sales and lowering its forecast for full-year net sales growth.

On the other hand, shares of Dow Chemical moved to the upside after the chemical giant reported better than expected first quarter earnings.

Traders largely seemed to shrug off a report from the Commerce Department that unexpectedly showed a steep drop in new home sale in March.

The report said new home sales plunged 14.5 percent to an annual rate of 384,000 in March from the revised February rate of 449,000.

The steep drop came as a surprise to economists, who had expected new home sales to climb to a rate of 455,000 from the 440,000 originally reported for the previous month.

Sector News

Electronic storage stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Disk Drive Index down by 1.9 percent. With the drop, the index gave back some ground after closing higher in five out of the six previous sessions.

EMC Corp. (EMC) helped to lead the storage sector lower, with the data storage equipment maker falling by 3.2 percent after lowering its full-year earnings guidance.

Considerable weakness was also visible among biotechnology stocks, as reflected by the 1.6 percent loss posted by the NYSE Arca Biotechnology Index. Industry giant Amgen (AMGN) posted a steep loss after reporting weaker than expected first quarter results.

Software, telecom, and housing stocks also saw significant weakness on the day, with the disappointing new home sales data weighing on the housing sector.

Meanwhile, gold stocks moved sharply higher over the course of the session, driving the NYSE Arca Gold Bugs Index up by 2.1 percent. The strength in the sector came as gold for June delivery rose by $3.50 to $1,284.60 an ounce.

Airline stocks also moved notably higher on the day, resulting in a 1.4 percent gain by the NYSE Arca Airline Index. Delta (DAL) jumped 6.1 percent after reporting better than expected first quarter earnings.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikki 225 Index surged up by 1.1 percent, while Hong Kong's Hang Seng Index dropped by 1 percent.

Meanwhile, the major European markets all ended the day in the red. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the German DAX Index and the French CAC 40 Index fell by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries moved moderately higher after closing nearly flat for two straight days. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.686 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to earnings news from big-name tech companies such as Apple (AAPL) and Facebook (FB), which are releasing their quarterly results after the close of today's trading.

Additionally, 3M (MMM), American Airlines (AAL), Caterpillar (CAT), General Motors (GM), UPS (UPS), and Verizon (VZ) are among the slew of companies due to report their results before the start of trading on Thursday.

Economic news may also attract some attention, with traders likely to keep an eye on reports on durable goods orders and weekly jobless claims.