Stocks Close Slightly Lower Following Lackluster Session - U.S. Commentary

(RTTNews) - After trending higher over the past few sessions, stocks turned in a relatively lackluster performance during trading on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line.

At the close of trading, the major averages were in negative territory but well off their worst levels. The Dow edged down 3.41 points or less than a tenth of a percent to 18,050.17, the Nasdaq dipped 5.95 points or 0.1 percent to 5,098.94 and the S&P 500 slipped 1.55 points or 0.1 percent to 2,107.40.

The choppy trading on Wall Street was partly due to trepidation ahead of a Greek parliament vote on the conditional bailout agreement that includes several tough austerity measures.

Greek lawmakers are expected to approve the deal, although images of protesters clashing with police in Athens raised some concerns.

Traders were also digesting remarks by Federal Reserve Chair Janet Yellen, who testified before the House Financial Services Committee.

Yellen reiterated her belief that it would be appropriate to raise interest rates before year-end if the economy evolves as expected.

However, the Fed Chief also noted the timing of the first rate hike will be determined on a meeting-by-meeting basis.

Yellen also said labor market conditions have improved substantially but are not yet consistent with maximum employment.

Meanwhile, the Labor Department released a report before the start of trading showing that producer prices rose by slightly more than expected in the month of June.

The Labor Department said its producer price index rose by 0.4 percent in June following a 0.5 percent increase in May. Economists had expected prices to climb by 0.3 percent.

Excluding food and energy prices, core producer prices increased by 0.3 percent in June after edging up by 0.1 percent in the previous month. Core prices had been expected to show another 0.1 percent uptick.

The Federal Reserve also released a separate report showing a slightly bigger than expected increase in industrial production in June.

The report said industrial production increased by 0.3 percent in June after edging down by 0.2 percent in May. Economists had expected production to rise by 0.2 percent.

Sector News

Oil service stocks moved sharply lower on the day, dragging the Philadelphia Oil Service Index down by 4 percent. With the steep drop, the index fell to its lowest closing level in almost four months.

The sell-off by oil service stocks came amid a significant decrease by the price of crude oil, with crude for August delivery tumbling $1.63 to $51.41 a barrel.

Considerable weakness also emerged among gold stocks, as reflected by the 2.4 percent loss posted by the NYSE Arca Gold Bugs Index. The index fell to a twelve-year low, as gold for August delivery slid $6.10 to $1,147.20 an ounce.

Steel, natural gas, and trucking stocks also came under pressure on the day, while notable strength was visible among banking stocks.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved higher on Wednesday. Japan's Nikkei 225 Index rose by 0.4 percent, and Australia's All Ordinaries Index advanced by 1 percent. However, China's Shanghai Composite Index bucked the uptrend and tumbled by 3 percent.

Meanwhile, the major European markets saw modest strength on the day. While the U.K.'s FTSE 100 Index ended the day unchanged, the German DAX Index and the French CAC 40 Index rose by 0.2 percent and 0.3 percent, respectively.

In the bond market, treasuries moved notably higher over the course of the session after initially showing a lack of direction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped by 4.9 basis points to 2.35 percent.

Looking Ahead

The outcome of the Greek vote is likely to attract some attention on Thursday along with U.S. reports on weekly jobless claims, homebuilder confidence and Philadelphia-area manufacturing activity.

Yellen is also scheduled to testify before the Senate Banking Committee, although her prepared remarks are likely to mirror those she delivered today.

Trading could also be impacted by reaction to earnings news from Intel (INTC), with the semiconductor giant releasing its second quarter results after the close of today's trading.

Citigroup (C), eBay (EBAY), Goldman Sachs (GS), and UnitedHealth (UNH) are also among the companies due to report their results before the start of trading on Thursday.