Stocks Continue To Experience Choppy Trading – U.S. Commentary

Following the volatility seen late in the previous session, stocks have continued to experience choppy trading on Wednesday. Reflecting the lack of direction, the major averages have spent the day bouncing back and forth across the unchanged line.

The major averages are currently posting modest losses on the day. The Dow is down 48.98 points or 0.2 percent at 26,403.68, the Nasdaq is down 11.27 points or 0.1 percent at 7,988.96 and the S&P 500 is down 7.59 points or 0.3 percent at 2,899.47.

The lackluster performance on Wall Street comes as traders digest a mixed batch of earnings news from big-name companies such as PepsiCo (PEP), Morgan Stanley (MS), Netflix (NFLX) and IBM Corp. (IBM).

PepsiCo and Morgan Stanley are posting notable gains after reporting quarterly results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, Netflix and IBM have moved to the downside after both reported better than expected earnings but on weaker than expected revenues and provided disappointing guidance.

Traders may also be reluctant to make more significant moves ahead of this afternoon’s release of the Federal Reserve’s Beige Book.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, may she additional light on the outlook for interest rates.

On the U.S. economic front, a report released by the Commerce Department showed the U.S. trade deficit unexpectedly narrowed in the month of February amid a jump in the value of exports.

The Commerce Department said the trade deficit narrowed to $49.4 billion in February from $51.1 billion in January, while economists had expected the deficit to widen to $53.5 billion.

Sector News

Despite the lack of direction being shown by the broader markets, biotechnology stocks have moved sharply lower over the course of the session.

Reflecting the weakness in the biotech sector, the NYSE Arca Biotechnology Index has plunged by 4.7 percent to a nearly three-month low.

Healthcare and pharmaceutical stocks are also seeing considerable weakness, with the Dow Jones Health Care Index and the NYSE Arca Pharmaceutical Index slumping by 2.8 percent and 1.7 percent, respectively.

On the other hand, semiconductor stocks have pulled back off their best levels but remain firmly positive. After reaching a record intraday high, the Philadelphia Semiconductor Index is up by 1.2 percent.

Communications chip maker Qualcomm (QCOM) continues to post a standout gain, soaring by 10.6 percent after settling a royalty dispute with Apple (AAPL).

Notable strength is also visible among transportation stocks, with CSX Corp. (CSX) leading the way higher after the railroad operator reported better than expected first quarter earnings.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index rose by 0.3 percent, while Australia’s S&P/ASX 200 Index dropped by 0.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index closed just above the unchanged line, the German DAX Index and the French CAC 40 Index climbed by 0.4 percent and 0.6 percent, respectively.

In the bond market, treasuries are showing a lack of direction after trending lower over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.585 percent.

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