U.S. Stocks Show Notable Rebound After Initial Move To The Downside

(RTTNews) - After an initial move to the downside, stocks have shown a notable turnaround over the course of the trading session on Wednesday. The major averages have bounced well off their lows of the session and into positive territory.

In recent trading, the Nasdaq and S&P 500 have reached new highs for the session. The Nasdaq is up 83.81 points or 0.5 percent at 16,324.26, the S&P 500 is up 20.90 points or 0.4 percent at 5,226.71 and the Dow is up 97.2 points or 0.3 percent at 39,267.45.

The rebound on Wall Street came following the release of a report from the Institute for Supply Management showing an unexpected slowdown in the pace of U.S. service sector growth in the month of March.

The ISM said its services PMI dipped to 51.4 in March from 52.6 in February. While a reading above 50 still indicates growth in the sector, economists had expected the index to inch up to 52.7.

Notably, the report also showed a substantial slowdown in the pace of price growth in the sector, with the prices index tumbling to 53.4 in March from 58.6 in February. The index fell to its lowest level since March 2020.

The data helped ease recent concerns about the outlook for interest rates, which contributed to the steep drop by stocks on Tuesday.

Worries the Federal Reserve may hold off on lowering interest rates also contributed to the early weakness on Wall Street after payroll processor ADP released a report this morning showing stronger than expected private sector job growth in the U.S. in the month of March.

ADP said private sector employment jumped by 184,000 jobs in March after climbing by an upwardly revised 155,000 jobs in February.

Economists had expected private sector employment to increase by 148,000 jobs compared to the addition of 140,000 jobs originally reported for the previous month.

The report also said the annual rate of pay growth for job-changers accelerated dramatically to 10.0 percent in March.

"Inflation has been cooling, but our data shows pay is heating up in both goods and services," said ADP chief economist Nela Richardson.

Despite the turnaround by the broader markets, shares of Intel (INTC) continue to see substantial weakness, with the semiconductor giant plunging by 6.9 percent.

Intel is under pressure after disclosing a $7 billion operating loss by its semiconductor manufacturing business in 2023, wider than the $5.2 billion operating loss the year before.

Sector News

Computer hardware stocks have shown a strong move to the upside on the day, driving the NYSE Arca Computer Hardware Index up by 1.5 percent.

Considerable strength has also emerged among gold stocks, as reflected by the 1.4 percent gain being posted by the NYSE Arca Gold Bugs Index. The index has reached its best intraday level in over ten months.

The strength in the gold sector comes amid a continued increase by the price of the precious metal, with gold for June delivery jumping $21.90 to $2,303.70 an ounce.

Transportation, energy and brokerage stocks have also moved to the upside on the day, while some weakness is visible among tobacco stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slumped by 1.0 percent, while Hong Kong's Hang Seng Index tumbled by 1.2 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is down by 0.2 percent, the French CAC 40 Index and the German DAX Index are both up by 0.3 percent.

In the bond market, treasuries have climbed well off their lows of the session but remain in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.0 basis points at 4.395 percent.