After showing a lack of direction early in the session, stocks continue to turn in a lackluster performance in mid-day trading on Tuesday. The major averages have spent the day bouncing back and forth across the unchanged line.
Currently, the major averages are posting modest losses. The Dow is down 34.47 points or 0.1 percent at 32,696.73, the Nasdaq is down 45.46 points or 0.3 percent at 13,332.08 and the S&P 500 is down 1.59 points or less than a tenth of a percent at 3,939.00.
The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets following recent volatility due to the jump in bond yields.
Some negative sentiment was generated by concerns about extended coronavirus lockdowns in Europe amid worries a new wave of infections.
German leaders agreed to extend the country’s lockdown until April 18, raising concerns about demand from Europe’s largest economy.
The news has contributed to a steep drop by the price of crude oil, with crude for May delivery plunging $2.93 to $58.63 a barrel.
However, a continued drop by treasury yields has helped keep selling pressure subdued, as the yield on the benchmark ten-year note continues to give back ground after reaching its highest levels in over a year last week.
Traders are also keeping an eye on Federal Reserve Chair Jerome Powell’s virtual testimony before the House Financial Services Committee this afternoon.
In prepared remarks, Powell reiterated the Fed’s recent assessment that indicators of economic activity and employment have turned up recently.
Powell noted that the economic recovery is “far from complete,” however, and stressed the Fed will continue to provide the support that the economy needs for “as long as it takes.”
Treasury Secretary Janet Yellen is also testifying at the hearing on the Treasury Department and Fed’s response to the coronavirus pandemic.
On the U.S. economic front, a report released by the Commerce Department showed a nosedive by U.S. new home sales in the month of February.
The Commerce Department said new home sales plummeted by 18.2 percent to an annual rate of 775,000 in February after jumping by 3.2 percent to an upwardly revised rate of 948,000 in January.
Economists had expected new home sales to tumble by 5.2 percent to a rate of 875,000 from the 923,000 originally reported for the previous month.
With the much bigger than expected decrease, new home sales plunged to their lowest rate since hitting 698,000 last May.
Despite the lackluster performance by the broader markets, oil service stocks have shown a substantial move to the downside along with the price of crude oil.
Reflecting the weakness in the sector, the Philadelphia Oil Service Index has plunged by 3.9 percent to its lowest intraday level in a month.
Considerable weakness is also visible among biotechnology stocks, as reflected by the 2.7 percent slump by the NYSE Arca Biotechnology Index.
Ionis Pharmaceuticals (IONS) is leading the sector lower after announcing its partner, Roche, has decided to discontinue dosing in the Phase III study of tominersen in manifest Huntington’s disease.
Airline stocks have also come under pressure over the course of the session, resulting in a 2.7 percent nosedive by the NYSE Arca Airline Index.
Gold, steel and semiconductor stocks are also seeing notable weakness on the day, while software, utility and retail stocks have shown strong moves to the upside.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.6 percent, while China’s Shanghai Composite Index slumped by 0.9 percent.
Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index has inched up by 0.2 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 0.2 percent.
In the bond market, treasuries remain firmly positive after an initial move to the upside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.3 basis points at 1.651 percent.
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