Stocks Close Firmly In The Red But Well Off Worst Levels - U.S. Commentary

(RTTNews) - After coming under pressure in early trading on Wednesday, stocks regained some ground as the day progressed but remained stuck in the red. The losses on the day extended the pullback that was seen in the previous session.

The major averages ended the day moderately lower, well off their worst levels. The Dow slid 106.47 points or 0.6 percent to 18,096.90, the Nasdaq dipped 12.76 points or 0.3 percent to 4,967.14 and the S&P 500 fell 9.25 points r 0.4 percent to 2,098.53.

The early weakness on Wall Street was partly due to profit taking, with traders continuing to cash in on the strength seen over the past few weeks.

The initial pullback dragged the Dow and the S&P 500 down further off the record closing highs set on Monday, while the Nasdaq fell further below 5,000.

Traders were also reacting to a report from payroll processor ADP showing a notable slowdown in the pace of private sector job growth in the month of February.

ADP said private sector employment increased by 212,000 jobs in February compared to an upwardly revised jump of 250,000 jobs in January. Economists had expected an increase of about 220,000 jobs.

Mark Zandi, chief economist of Moody's Analytics, said, "Job growth is strong, but slowing from the torrid pace of recent months."

"Job gains remain broad-based, although the collapse in oil prices has begun to weigh on energy-related employment," he added.

The release of the disappointing ADP report came ahead of Friday's Labor Department report, which includes data on both public and private sector jobs.

Economists currently expect the Labor Department report to show an increase of about 230,000 jobs in the month of February.

A separate report from the Institute for Supply Management unexpectedly showed a modest uptick by its reading on service sector activity, but the internals were mixed.

Later in the day, the Federal Reserve's Beige Book said economic activity continued to expand across most regions and sectors from early January through mid-February.

Sector News

While many of the major sectors recovered from their early lows, significant weakness remained visible among gold stocks. The NYSE Arca Gold Bugs Index fell by 1.7 percent, hitting its lowest closing level in almost two months.

The weakness in the gold sector came amid a modest decrease by the price of the precious metal, with gold for April delivery sliding $3.50 to $1,200.90 an ounce.

Steel stocks also ended the day notably lower, resulting in a 1.3 percent drop by the NYSE Arca Steel Index. L.B. Foster (FSTR) posted a particularly steep loss after Stifel downgraded its rating on the company's stock to Hold from Buy.

Commercial real estate and computer hardware stocks also saw considerable weakness, while significant strength emerged among biotechnology stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.6 percent, while Hong Kong's Hang Seng Index slumped by 1 percent.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the German DAX Index and the French CAC 40 Index both jumped by 1 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point at 2.123.

Looking Ahead

Trading on Thursday could be impacted by reaction to news from the European Central Bank, which is expected to provide details regarding its quantitative-easing program after its monetary policy meeting.

On the U.S. economic front, traders will also be presented with reports on weekly jobless claims, labor productivity, and factory orders.

Nonetheless, trading activity may be somewhat subdued as traders look ahead to the release of the Labor Department's monthly jobs report on Friday.