U.S. Stocks Continue To Show A Lack Of Direction

After showing a lack of direction early in the session, stocks continue to turn in a lackluster performance in afternoon trading on Wednesday. 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 93.56 points or 0.3 percent at 31,697.31, the Nasdaq is down 12.55 points or 0.1 percent at 11,870.58 and the S&P 500 is down 6.93 points or 0.2 percent at 3,979.23.

The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets following recent weakness.

Some traders have looked to pick up stocks at reduced levels after the major averages fell to their lowest levels in a month, although concerns about higher interest rates and the economic outlook continue to weigh on the markets.

In remarks earlier this morning, Cleveland Federal Reserve President Loretta Mester said she expects interest rates to be raised above 4 percent by early next year.

Mester also said she does not anticipate the Federal Reserve cutting interest rates in 2023, with the Fed likely to keep rates at an elevated level in an effort to combat inflation.

On the U.S. economic front, payroll processor ADP released a report showing private sector employment in the U.S. increased by much less than expected in the month of August.

ADP said private sector employment rose by 132,000 jobs in August after jumping by nearly 270,000 jobs in July. Economists had expected employment to surge by 288,000 jobs.

“Our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy‘s conflicting signals,” said ADP chief economist Nela Richardson. “We could be at an inflection point, from super-charged job gains to something more normal.”

ADP suspended its jobs report for June and July as the firm revamped its methodology and entered into a partnership with the Stanford Digital Economy Lab.

Sector News

Most of the major sectors continue to show only modest moves on the day, contributing to the lackluster performance by the broader markets.

Semiconductor stocks have shown a significant move to the downside, however, with the Philadelphia Semiconductor Index falling by 1.5 percent.

Notable weakness has also emerged among computer hardware stocks, as reflected by the 1.1 percent drop by the NYSE Arca Computer Hardware Index.

HP Inc. (HPQ) has helped lead the sector lower after the PC and printer maker reported fiscal third quarter earnings that met analyst estimates but weaker than expected sales. HP also reduced its annual profit forecast.

Airline, chemical and gold stocks have also moved lower on the day, while oil service stocks have rebounded after coming under pressure in early trading.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while South Korea’s Kospi advanced by 0.9 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index tumbled by 1.4 percent, the U.K.’s FTSE 100 Index and the German DAX Index slumped by 1.1 percent and 1.0 percent, respectively.

In the bond market, treasuries continue to show a lack of direction 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 unchanged at 3.110 percent.

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