Stocks Close Little Changed For Second Straight Day - U.S. Commentary

(RTTNews) - Extending the lackluster performance seen in the previous session, stocks showed a lack of direction throughout the trading day on Wednesday. The major averages once again spent the day bouncing back and forth across the unchanged line.

At the close of trading, the major averages were mixed. While the Nasdaq inched up 1.71 points or less than a tenth of a percent to 5,071.74, the Dow dipped 26.99 points or 0.2 percent to 18,285.40 and the S&P 500 edged down 1.98 points or 0.1 percent at 2,125.85.

The choppy trading seen for much of the session came as traders waited on the release of the minutes of the Federal Reserve's latest monetary policy meeting.

However, traders still did not show much conviction following the release of the Fed minutes, which seemed to reaffirm that the central bank will not raise interest rates in June.

The minutes of the April meeting said many participants thought it unlikely that the economic data available in June would provide sufficient confirmation that the conditions for raising rates had been satisfied.

The participants still did not rule out the possibility of a June rate hike, but only a few expect the conditions for rate hike to be met by then.

"At this stage, that is not much of a surprise," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "Most economists already expect the Fed to wait until September."

He added, "The rebound in April payrolls wasn't strong enough to put June back on the table and the weakness in April's retail sales and manufacturing output figures probably made July an unlikely prospect too."

Traders may also have been looking ahead to the release of reports on weekly jobless claims, existing home sales, and consumer price inflation in the coming days.

Another mixed batch of earnings news from the retail sector may also have contributed to the continued choppy trading on Wall Street.

Shares of Lowe's (LOW) fell sharply on the day after the home improvement retailer reported weaker than expected first quarter results.

Office supplies retailer Staples (SPLS) also came under pressure after reporting first quarter earnings that met Wall Street estimates but on revenues that came in below expectations.

Meanwhile, shares of Target (TGT) closed modestly higher after the discount retailer reported better than expected first quarter earnings and raised the low end of its full-year earnings guidance.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Airline stocks saw substantial weakness, however, with the NYSE Arca Airline Index plunging by 4.6 percent. With the drop, the index fell to a five-month closing low.

The sell-off by airline stocks was partly due to concerns about lower fares and airline revenue after Southwest Airlines (LUV) said it is speeding up its planned growth.

Trucking and railroad stocks also moved to the downside, reflecting weakness in the broader transportation sector. The Dow Jones Transportation Average fell 2 percent to its worst closing level in seven months.

On the other hand, biotechnology stocks moved notably higher over the course of the session, driving the NYSE Arca Biotechnology Index up by 1.4 percent. The gain lifted the index to a two-month closing high.

Alnylam Pharmaceuticals (ALNY) posted a standout gain within the biotech sector after receiving orphan drug status for its transthyretin treatment revusiran.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Wednesday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

The major European markets also ended the day mixed. While the German DAX Index edged down by less than a tenth of a percent, the U.K.'s FTSE 100 Index crept up by 0.2 percent and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries closed modestly higher after showing a lack of direction for much of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slipped 1.1 basis points to 2.251 percent.

Looking Ahead

While traders will continue to digest the Fed minutes overnight, trading on Thursday is likely to be driven by reaction to economic reports on weekly jobless claims, existing home sales, and Philadelphia manufacturing activity.