Major Averages Turning In Mixed Performance In Afternoon Trading

Stocks moved mostly higher in early trading on Wednesday but have fluctuated over the course of the session since then. The S&P 500 has spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Dow is down 208.61 points or 0.6 percent at 33,353.20, the S&P 500 is up 0.79 points or less than a tenth of a percent at 4,119.96 and the Nasdaq is up 79.88 points or 0.7 percent at 12,259.43.

The initial strength on Wall Street partly reflected a positive reaction to the Labor Department’s highly anticipated report on consumer price inflation in the month of April.

The Labor Department said its consumer price index climbed by 0.4 percent in April after inching up by 0.1 percent in March. Economists had expected consumer prices to rise by 0.4 percent.

Excluding food and energy prices, core consumer prices also rose by 0.4 percent in April, matching the increase seen in March as well as economist estimates.

The report also showed the annual rate of consumer price growth edged down to 4.9 percent in April from 5.0 percent in March. Economists had expected the year-over-year growth to be unchanged.

The annual rate of core consumer price growth also slipped to 5.5 percent in April from 5.6 percent in March. The modest slowdown matched economist estimates.

With the annual consumer price growth marking the smallest 12-month increase since April 2021, the data added to optimism about the Federal Reserve pausing its interest rate hikes.

CME Group’s FedWatch Tool is currently indicating a 91.5 percent chance the Federal Reserve will leave interest rates unchanged at its next meeting in June.

Buying interest has waned over the course of the session, however, as traders worry the slowdown in the pace of price growth is partly due to the U.S. heading for a recession.

“We expect to receive more encouraging news on the inflation front as the economy cools though we won’t reach the Fed’s 2% inflation target for quite some time,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

He added, “A positive consequence of the oncoming mild recession that we expect in H2 2023 is it should help ease price pressures.”

Sector News

Steel stocks have shown a significant move to the downside amid concerns about demand, resulting in a 2.0 percent slump by the NYSE Arca Steel Index.

Considerable weakness also remains visible among oil service stocks, as reflected by the 1.7 percent drop by the Philadelphia Oil Service Index.

The weakness in the oil service sector comes amid a steep drop by the price of crude oil, with crude for June delivery tumbling $1.50 to $72.21 a barrel following a report showing an unexpected weekly increase in U.S. crude oil inventories.

Banking and airline stocks have also come under pressure over the course of the session, while software stocks continue to turn in a strong performance, driving the Dow Jones U.S. Software Index up by 1.5 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index slumped by 1.2 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index slid by 0.5 percent, the German DAX Index declined by 0.4 and the U.K.’s FTSE 100 Index dipped by 0.3 percent.

In the bond market, treasuries have moved notably higher after ending the previous session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 7.1 basis points at 3.450 percent.

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