Stocks Follow Oil Prices Lower After Seeing Early Strength - U.S. Commentary

(RTTNews) - Stocks moved mostly lower over the course of the trading session on Wednesday after failing to sustain an early move to the upside. With the downturn on the day, the major averages added to the losses posted in the two previous sessions.

The major averages all closed in negative territory, with the Nasdaq posting a particularly steep loss. The Nasdaq plunged 75.38 points or 1.5 percent to 5,022.87, while the Dow fell 75.70 points or 0.4 percent to 17,492.30 and the S&P 500 slid 15.97 points or 0.8 percent to 2,047.62.

The early strength on Wall Street was partly due to a rebound in oil prices, with crude for January delivery rising by nearly $1.50 a barrel.

The jump in the price of crude oil came following the release of a report from the Energy Information Administration showing a steep drop in crude oil inventories in the week ended December 4th.

The report said crude oil inventories tumbled by 3.6 million barrels, marking the first drop in crude oil stockpiles in nearly three months.

However, the price of oil showed a substantial pullback, and crude for January delivery eventually ended the day down $0.35 at a new six-year closing low of $37.16 a barrel.

The downturn by the price of crude oil was partly attributed to the 5 million barrel jump in distillate inventories reported by the EIA.

While the drop by the price of oil weighed on the broader markets, DuPont (DD) and Dow Chemical (DOW) managed to hold on to strong gains amid reports the chemical giants are in merger talks.

Casino operator Wynn Resorts (WYNN) also closed notably higher on news its CEO Stephen Wynn bought more than 1 million shares of the company's stock on the open market.

Meanwhile, shares of Lululemon Athletica (LULU) came under pressure after the athletic apparel company reported weaker than expected third quarter results and provided disappointing guidance.

Wholesale retailer Costco (COST) also moved to the downside after reporting first quarter results that came in below analyst estimates.

Sector News

Housing stocks came under considerable selling pressure on the day, dragging the Philadelphia Housing Sector Index down by 2.3 percent. With the loss, the index fell to its lowest closing level in almost a month.

Meritage Homes (MTH) and PulteGroup (PHM) turned in two of the housing sector's worst performances, tumbling by 4.9 percent and 4.1 percent, respectively.

Significant weakness also emerged among brokerage stocks, as reflected by the 1.9 loss posted by the NYSE Arca Broker/Dealer Index. The index also fell to a nearly one-month closing low.

Computer hardware, biotechnology, and internet stocks also saw notable weakness, contributing to the steep drop by the tech-heavy Nasdaq.

On the other hand, oil service stocks held on to some of their early gains, resulting in a 2.2 percent jump by the Philadelphia Oil Service Index. The gain by the index came after it ended the previous session at its lowest closing level in over two months.

Gold, steel, railroad, and natural gas also ended the day notably higher, regaining some ground following recent weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slumped by 1 percent, while Hong Kong's Hang Seng Index dropped by 0.5 percent.

The major European markets also ended the day in the red. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the German DAX Index fell by 0.8 percent and French CAC 40 Index slid by 1 percent.

In the bond market, treasuries turned higher over the course of the session after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 3 basis points to 2.208 percent after hitting a high of 2.271 percent.

Looking Ahead

While the price of crude oil is likely to remain in focus on Thursday, trading could also be impacted by reports on weekly jobless claims and import and export prices.