Stocks Under Pressure Amid Continued Fed Worries - U.S. Commentary

(RTTNews) - Stocks have seen considerable volatility over the course of the trading day on Wednesday as traders digest a mixed batch of economic data. Selling pressure has intensified in recent trading, dragging the major averages firmly into negative territory.

The major averages have edged up off their lows for the session in the past few minutes but remain in the red. The Dow is down 98.64 points or 0.6 percent at 15,815.98, the Nasdaq is down 25.51 points or 0.6 percent at 4,011.69 and the S&P 500 is down 13.10 points or 0.7 percent at 1,782.05.

The weakness visible on Wall Street in mid-afternoon trading reflects continued concerns about the outlook for the Federal Reserve's stimulus program.

Adding to the worries about the Fed, payroll processor ADP released a report before the start of trading showing stronger than expected private sector job growth in the month of November.

ADP said the private sector added 215,000 jobs in November following an upwardly revised increase of 184,000 jobs in October. Economists had expected private sector employment to increase by about 170,000 jobs.

The strong private sector job growth increased the focus on Friday's monthly jobs report from the Labor Department, which could have a significant impact on the outlook for the Fed's asset purchase program.

A separate report from the Commerce Department showed a substantial increase in new home sales in the month of October, with the increase in sales more than offsetting the decrease seen in September.

The report said new home sales jumped 25.4 percent to a seasonally adjusted annual rate of 444,000 in October after sliding 6.6 percent to 354,000 in September. Economists had expected new home sales to come in at a rate of 425,000.

The Commerce Department released the data for both October and September on the same day as a result of the recent government shutdown.

Meanwhile, the Institute for Supply Management also released a report showing an unexpected decrease by its reading on activity in the service sector.

The ISM said its non-manufacturing index fell to 53.9 in November from 55.4 in October, hitting its lowest level since June.

A reading above 50 indicates continued growth in the service sector, but economists had expected the index to inch up to a reading of 55.5.

Sector News

Airline stocks are seeing significant weakness in mid-afternoon trading, extending the pullback seen over the past few sessions. The NYSE Arca Airline Index is down by 1.9 percent, pulling back further off last Wednesday's eleven-year closing high.

JetBlue (JBLU) and Alaska Air (ALK) are turning in two of the airline sector's worst performances, falling by 3.2 percent and 3.1 percent, respectively.

Considerable weakness is also visible among housing stocks, as reflected by the 1.5 loss being posted by the Philadelphia Housing Sector Index. Vulcan Materials (VMC) and Lennar (LEN) are posting steep losses.

Defensive stocks have also come under pressure on the day, dragging the Philadelphia Defense Sector Index down by 1.5 percent. The index is pulling back further off the record closing high set last Wednesday.

Oil service, railroad, and retail stocks are also seeing notable weakness, while gold stocks are bucking the downtrend amid a sharp jump by the price of gold.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 2.2 percent, while Hong Kong's Hang Seng Index fell by 0.8 percent.

The major European markets climbed off their worst levels but still ended the day in the red. While the German DAX Index dropped by 0.9 percent, the French CAC 40 Index slid by 0.6 percent and the U.K.'s FTSE 100 Index dipped by 0.3 percent.

In the bond market, treasuries continue to see considerable weakness after coming under pressure in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7.3 basis points at 2.848 percent.