Major Averages Close Mixed In Light Pre-Holiday Trading - U.S. Commentary

(RTTNews) - Following the strong upward move seen in the previous session, stocks turned in a relatively lackluster performance during trading on Wednesday. Despite the choppy trading, the tech-heavy Nasdaq inched up to a new record closing high.

The major averages eventually ended the session mixed. While the Nasdaq inched up 4.88 points or 0.1 percent to 6,867.36, the Dow dipped 64.65 points or 0.3 percent to 23,526.18 and the S&P 500 edged down 1.95 points or 0.1 percent to 2,597.08.

The choppy trading on Wall Street came as many traders looked to get a head start on tomorrow's Thanksgiving Day holiday.

Stocks continued to show a lack of direction following the release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes said many participants thought that another near-term increase in interest rates was likely to be warranted if incoming information left the medium-term outlook broadly unchanged.

However, several participants indicated their decision about raising rates would depend on whether incoming data boosted their confidence that inflation was headed toward the Fed's 2 percent objective.

Following the release of the minutes, Paul Ashworth, Chief U.S. Economist at Capital Economics said, "A December rate hike is still the most likely outcome."

On the U.S. economic front, the Labor Department released a report showing a pullback in initial jobless claims in the week ended November 18th.

The report said initial jobless claims fell to 239,000, a decrease of 13,000 from the previous week's revised level of 252,000. Economists had expected jobless claims to drop to 240,000.

A separate report from the Commerce Department showed an unexpected drop in durable goods orders in the month of October, although the decrease primarily reflected a sharp pullback in volatile orders for transportation equipment.

The Commerce Department said durable goods orders tumbled by 1.2 percent in October after surging up by an upwardly revised 2.2 percent in September.

The decrease surprised economists, who had expected orders to edge up by 0.3 percent compared to the 2.0 percent increase that had been reported for the previous month.

Excluding the steep drop in orders for transportation equipment, durable goods orders rose by 0.4 percent in October after jumping by 1.1 percent in September. Ex-transportation orders had been expected to climb by 0.5 percent.

The University of Michigan also released a report showing a bigger than expected upward revision to its consumer sentiment index for November.

The report said the consumer sentiment index for November was upwardly revised to 98.5 from the preliminary estimate of 97.8. Economists had expected the index to be upwardly revised to 98.0.

While the consumer sentiment index was upwardly revised by more than expected, it remains below the thirteen-year high of 100.7 seen in October.

Sector News

Most of the major sectors showed only modest moves on the day, contributing to the lackluster performance by the broader markets.

Energy stocks saw considerable strength, however, benefiting from a sharp increase by the price of crude oil. Crude for January delivery jumped $1.19 to $58.02 a barrel following the release of a report showing a weekly drop in crude oil inventories.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index advanced by 1.4 percent and the Philadelphia Oil Service Index rose by 1 percent.

Significant strength was also visible among gold stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Gold Bugs Index. The gains by gold stocks came as the price of gold for December delivery climbed $10.50 to $1,292.20 an ounce.

Telecom and steel stocks also saw notable strength on the day, while moderate weakness was visible among brokerage and semiconductor stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw further upside on Wednesday following the overnight strength on Wall Street. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index rose by 0.5 percent and 0.6 percent, respectively.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index fell by 0.3 percent and the German DAX Index slumped by 1.2 percent.

In the bond market, treasuries saw further upside after ending the previous session slightly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.1 basis points to 2.322 percent.

Looking Ahead

Following the Thanksgiving Day holiday on Thursday, trading activity on Friday is likely to be subdued amid a quiet day on the U.S. economic front and an early close on Wall Street.