U.S. Stocks Experiencing Choppy Trading Following Yesterday’s Sell-Off

After ending the previous session sharply lower, stocks have shown a lack of direction over the course of morning trading on Wednesday. The major averages have spent the morning bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Dow is up 34.80 points or 0.1 percent at 30,981.79, the Nasdaq is down 43.57 points or 0.4 percent at 11,137.97 and the S&P 500 is down 7.89 points or 0.2 percent at 3,813.66.

The choppy trading on Wall Street comes as uncertainty about the near-term outlook for the markets is keeping some traders on the sidelines following recent volatility.

The sharp pullback during trading on Tuesday came on the heels of the strong upward move seen last week, which in turn reflected a rebound from the sell-off seen earlier this month.

Traders are also keeping an eye on remarks by Federal Reserve Chair Jerome Powell, who is participating in a panel discussion at the European Central Bank Forum on Central Banking alongside ECB President Christine Lagarde and Bank of England Governor Andrew Bailey.

Powell reiterated his previously share belief that the U.S. economy is “well positioned to withstand tighter monetary policy” but cautioned there’s no guarantee the Fed can engineer a “soft landing.”

“We think that there are pathways for us to achieve the path back to 2 percent inflation while still retaining a strong labor market. We believe we can do that,” Powell said. “It’s obviously something that’s going to be quite challenging.”

In U.S. economic news, revised data released by the Commerce Department showed U.S. economic activity shrank by slightly more than previously estimated in the first quarter of 2022.

The report showed the decrease in real gross domestic product in the first quarter was revised to 1.6 percent from the previously reported 1.5 percent. Economists had expected the drop in GDP to be unrevised.

The slightly bigger than previously estimated decline in GDP in the first quarter came on the heels of the 6.9 percent spike in GDP in the fourth quarter of 2021.

While most of the other major sectors are showing more modest moves, semiconductor stocks have moved sharply lower, resulting in a 2.9 percent nosedive by the Philadelphia Semiconductor Index.

Significant weakness has also emerged among airline stocks, as reflected by the 2.3 percent slump by the NYSE Arca Airline Index.

Networking stocks are also seeing considerable weakness on the day, with the NYSE Arca Networking Index tumbling by 1.9 percent.

Tobacco, computer hardware and commercial real estate stocks have also shown notable moves to the downside, while pharmaceutical and retail stocks are regaining some ground.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index tumbled by 1.4 percent.

Most European stocks have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has bucked the downtrend and inched up by 0.2 percent, the French CAC 40 Index and the German DAX Index are slumping by 1 percent and 1.4 percent, respectively.

In the bond market, treasuries have moved notably higher after ending the previous session little changed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 7.9 basis points at 3.127 percent.

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