Stocks Continue To Show A Lack Of Direction - U.S. Commentary

(RTTNews) - Stocks have shown a lack of direction over the course of the trading day on Wednesday, as traders seem reluctant to make any significant moves following the upward trend that was shown by the markets over the past two weeks.

The major averages are currently turning in a mixed performance, although they are all showing only modest moves. While the Nasdaq is up 3.13 points or 0.1 percent at 3,507.39, the Dow is down 29.22 points or 0.2 percent at 15,271.12 and the S&P 500 is down 3.06 points or 0.2 percent at 1,649.26.

The choppy trading on Wall Street comes as traders express some uncertainty about the outlook for the markets after recent gains lifted the tech-heavy Nasdaq to its best closing level since October of 2000.

Traders also seem reluctant to make any significant moves ahead of the release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes of the two-day meeting held in mid-June may shed additional light on the outlook for the central bank's asset purchase program.

Peter Boockvar of Morgan Stanley said, "While eyes will be on the FOMC minutes from the last meeting, we've heard from multiple Fed members since all trying to clarify what they really meant."

At the meeting, the Fed left interest rates unchanged and maintained the pace of its asset purchase program at $85 billion a month, as was widely expected.

However, the statement from central bank said that downside risks to the outlook for the economy and the labor market have diminished since the fall. The Fed also acknowledged further improvement in labor market conditions.

The relatively upbeat comments regarding the economic outlook added to concerns about the Fed tapering its asset purchase program in the near future.

In his subsequent press conference, Fed Chairman Ben Bernanke said the central bank might be able to scale back its asset purchases later this year if economic conditions warrant, triggering a sell-off on Wall Street that lasted for several days.

Traders have largely shrugged off a report from the Commerce Department showing an unexpected drop in wholesale inventories in May. The report also showed a notable increase in wholesale sales.

"From a market perspective, wholesale inventories are never market moving but still point to a sluggish economy that can't get much traction past 2% growth," Boockvar said.

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lack of direction being shown by the broader markets.

Banking stocks are seeing notable weakness, however, with the KBW Bank Index down by 1.6 percent in mid-day trading. The index is giving back some ground after ending the previous session at its best closing level in nearly five years.

Railroad and steel stocks have also moved to the downside on the day, while strength is visible among semiconductor, telecom, and biotech stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. While Japan's Nikkei 225 Index fell by 0.4 percent, Hong Kong's Hang Seng Index surged up by 1.1 percent.

Meanwhile, the major European markets all saw modest weakness on the day. The U.K.'s FTSE 100 Index, the French CAC 40 Index and the German DAX Index all edged down by 0.1 percent.

In the bond market, treasuries are seeing moderate weakness but remain well off their recent lows. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.1 basis points at 2.661 percent.