Stocks Move Modestly Lower On Yellen Comments - U.S. Commentary

(RTTNews) - Stocks have moved modestly lower over the course of the trading day on Wednesday after initially showing a lack of direction. The pullback by the markets comes on the heels of the gains seen in the two previous sessions.

The major averages have moved roughly sideways in recent trading, stuck in the red. The Dow is down 56.29 points or 0.3 percent at 17,861.86, the Nasdaq is down 13.89 points or 0.3 percent at 5,131.23 and the S&P 500 is down 8.02 points or 0.4 percent at 2,101.77.

The modest weakness that has emerged has been partly attributed to remarks by Federal Reserve Chair Janet Yellen about the outlook for interest rates.

In testimony before the House Financial Services Committee, Yellen said a December interest rate would be a "live possibility" if the incoming economic data supports such a move.

Yellen stressed that no decision has been made but said raising rates "in a timely fashion" is the "prudent thing to do."

The Fed Chief's remarks came on the heels of some upbeat U.S. economic data hinting at a possible December rate hike.

Before the start of trading, payroll processor ADP released a report showing that private sector employment increased roughly in line with economist estimates in October.

ADP said the private sector added 182,000 jobs in October following a downwardly revised increase of 190,000 jobs in September. Economists had expected private sector employment to climb by about 180,000 jobs.

A separate report from the Institute for Supply Management said activity in the service sector unexpectedly grew at a faster rate in October.

The ISM said its non-manufacturing index climbed to 59.1 in October from 56.9 in September, with a reading above 50 indicating growth in the service sector. The index has been expected to dip to 56.5.

James Knightley, an economist at ING Bank, said, "While the manufacturing sector remains under pressure from dollar strength and external demand weakness, the rest of the U.S. economy is looking in good shape."

"If this is backed up by a respectable payrolls report (and hopefully a rise in average earnings) on Friday, it will look increasingly likely that the Federal Reserve will come down in favor of hiking in December," he added.

The data has increased the focus on Friday's monthly jobs report from the Labor Department, which includes both public and private sector jobs.

Sector News

Gold stocks have moved sharply lower as the day has progressed, dragging the NYSE Arca Gold Bugs Index down by 1.9 percent. The index is on pace to end the session at its lowest closing level in a month.

The weakness among gold stocks comes amid a modest decrease by the price of the precious metal, with gold for December delivery slipping $1.40 to $1,112.70 an ounce.

Considerable weakness has also emerged among steel stocks, as reflected by the 1.8 percent loss being posted by the NYSE Arca Steel Index. U.S. Steel (X) is posting a steep loss after reporting a wider than expected third quarter loss.

Airline, electronic storage, trucking and networking stocks have also come under pressure over the course of the trading session.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region saw further upside during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.3 percent, while Hong Kong's Hang Seng Index surged up by 2.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index slumped by 1 percent, the U.K.'s FTSE 100 Index advanced by 0.5 percent and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries have turned lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.8 basis points at 2.238 percent.