Major Averages Posting Modest Losses As Fed Announcement Looms

Largely mirroring the activity seen in the previous session, stocks continue to turn in a lackluster performance in mid-day trading on Wednesday. While the Dow has been stuck in the red, the broader Nasdaq and S&P 500 have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 149.31 points or 0.4 percent at 33,835.62, the Nasdaq is down 50.11 points or 0.4 percent at 14,040.10 and the S&P 500 is down 2.82 points or 0.1 percent at 4,183.90.

The choppy trading on Wall Street comes as traders remain reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement this afternoon.

While the Fed is widely expected to leave its ultra-easy monetary policy unchanged, traders will be looking for any changes to the accompanying statement.

With the economy recovering strongly from the pandemic-induced recession and inflation accelerating, some analysts expect the Fed to begin hinting at tapering its asset purchases at upcoming meetings.

Traders are also digesting the latest earnings news from several big-name companies, including some megacap technology stocks.

Shares of Alphabet (GOOGL) have moved sharply higher after the Google parent reported better than expected first quarter results and announced a $50 billion stock buyback.

Credit card giant Visa (V) has also shown a notable move to the upside after reporting fiscal second quarter results that beat analyst estimates on both the top and bottom lines.

On the other hand, shares of Microsoft (MSFT) are seeing significant weakness even though the software giant reported better than expected fiscal third quarter results.

Fellow Dow components Amgen (AMGN) and Boeing (BA) have also come under pressure, weighing on the blue chip index.

Amgen is down by 7.6 percent after reporting first quarter results that missed estimates, while Boeing is down by 3.6 percent after reporting a wider than expected first quarter loss.

Sector News

Most of the major sectors continue to show only modest in mid-day trading, although substantial strength remains visible among energy stocks.

The rally by energy stocks comes amid a sharp increase by the price of crude oil, with crude for June delivery jumping $1.29 to $64.23 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 5.1 percent, the NYSE Arca Oil Index is up by 3.7 percent and the NYSE Arca Natural Gas Index is up by 2.4 percent.

On the other hand, software stocks have moved notably lower amid the negative reaction to Microsoft’s results, dragging the Dow Jones U.S. Software Index down by 1.9 percent.

Semiconductor and computer hardware stocks have also moved to the downside, with the Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index down by 1.4 percent and 1.2 percent, respectively.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved modestly higher during trading on Wednesday. Japan’s Nikkei 225 Index crept up by 0.2 percent, while China’s Shanghai Composite Index rose by 0.4 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index climbed by 0.5 percent, the German DAX Index and the U.K.’s FTSE 100 Index both edged up by 0.3 percent.

In the bond market, treasuries have moved modestly lower ahead of the Fed announcement. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 1.638 percent.

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