U.S. Stocks Move Mostly Lower As Data Adds To Interest Rate Uncertainty

(RTTNews) - After coming under pressure early in the session, stocks remained mostly lower throughout the trading day on Wednesday. The major averages added to the losses posted during Tuesday's session, with the Dow falling to its lowest closing level in almost a month.

The major averages regained ground going into the close of trading but remained in negative territory. The Dow dipped 94.45 points or 0.3 percent to37,266.67, the Nasdaq slid 88.73 points or 0.6 percent to14,855.62 and the S&P 500 fell 26.77 points or 0.6 percent to 4,739.21.

The early weakness on Wall Street partly reflected ongoing uncertainty about the outlook for interest rates amid recent concerns the Federal Reserve won't lower rates as early as previously anticipated.

Adding to worries the Fed will hold off on cutting rates, the Commerce Department released a report this morning showing U.S. retail sales increased by more than expected in the month of December.

The report said retail sales climbed by 0.6 percent in December after rising by 0.3 percent in November. Economists had expected retail sales to advance by 0.4 percent.

Excluding a jump in sales by motor vehicle and parts dealers, retail sales rose by 0.4 percent in December after inching up by 0.2 percent in November. Ex-auto sales were expected to edge up by another 0.2 percent.

"As long as the primary indicators of economic activity like personal spending and the labor market are showing no signs of weakness, the Fed will be comfortable extending its rate pause through the March FOMC decision at least," said FHN Financial Macro Strategist Will Compernolle.

A separate report released by the Federal Reserve showed an unexpected uptick in U.S. industrial production in the month of December.

The Fed said industrial production inched up by 0.1 percent in December, while revised data showed production was unchanged in November.

Economists had expected industrial production to come in unchanged compared to the 0.2 percent increase originally reported for the previous month.

Sector News

Airline stocks turned in some of the market's worst performances on the day, resulting in a 3.2 percent nosedive by the NYSE Arca Airline Index. The index fell to its lowest closing level in well over a month.

Shares of Spirit Airlines (SAVE) plummeted after a federal judge blocked JetBlue's (JBLU) proposed $3.8 billion acquisition of the discount airline.

Gold stocks also saw considerable weakness amid a decrease by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 2.3 percent.

Commercial real estate, telecom and utilities stocks also showed notable moves to the downside, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index tumbled by 2.1 percent and Hong Kong's Hang Seng Index plunged by 3.7 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1.5 percent, the French CAC 40 Index slid by 1.1 percent and the German DAX Index fell by 0.8 percent.

In the bond market, treasuries extended the notable downward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.0 basis points to 4.106 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to another batch of U.S. economic data, including reports on jobless claims, housing starts and Philadelphia-area manufacturing activity.