Stocks Close Mixed Following Choppy Trading Day - U.S. Commentary

(RTTNews) - After ending the two previous sessions sharply higher, stocks showed a lack of direction throughout the trading day on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line before ending the session mixed.

While the Dow inched up 6.62 points or less than a tenth of a percent to 17,673.02, the Nasdaq dipped 11.03 points or 0.2 percent to 4,716.70 and the S&P 500 fell 8.52 points or 0.4 percent to 2,041.51.

The modest gain posted by the Dow was largely due to a sharp jump by shares of Disney (DIS), which surged up by 7.6 percent after the entertainment giant reported better than expected first quarter results.

Meanwhile, the broader Nasdaq and S&P 500 pulled back into the red late in the session following news that the European Central Bank will no longer accept Greek bonds as collateral for loans.

The ECB said it decided to lift a waiver affecting Greek government debt that previously allowed the bonds to be used in Eurosystem monetary policy operations despite the fact that they did not fulfill minimum credit rating requirements.

"This news will like scare depositors and result in further bank runs," said Peter Boockvar, managing director at the Lindsey Group. "This all said, if Greece can come to an agreement with the troika, I'm sure the ECB will reinstate the waiver."

A sharp drop by the price of crude oil also weighed on the markets, with oil prices giving back ground after spiking higher over the three previous sessions.

Crude for March delivery plummeted $4.60 to $48.45 a barrel after ending the previous session at its highest closing level of 2015.

On the economic front, payroll processor ADP released a report showing weaker than expected private sector job growth in the month of January.

ADP said private sector employment rose by 213,000 jobs in January following an upwardly revised increase of 253,000 jobs in December. Economists had expected an increase of about 223,000 jobs.

Mark Zandi, chief economist of Moody's Analytics, said, "Employment posted another solid gain in January, although the pace of growth is slower than in recent months."

"Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring," he added.

A separate report from the Institute for Supply Management showed a modest uptick by its index of activity in the service sector.

The ISM said its non-manufacturing index inched up to 56.7 in January from an upwardly revised 56.5 in December, with a reading above 50 indicating growth in the service sector.

Sector News

Despite the lackluster performance turned in by the broader markets, substantial weakness was visible among oil service stocks. The Philadelphia Oil Service Index tumbled by 3 percent, partly offsetting the strong gains posted in the previous session.

Oil States (OIS) and Nabors Industries (NBR) turned in two of the sector's worst performances amid the sharp drop by the price of crude oil.

Trucking stocks also saw considerable weakness on the day, dragging the Dow Jones Trucking Index down by 2.7 percent. C.H. Robinson (CHRW) led the sector lower despite reporting fourth quarter earnings that beat analyst estimates.

After moving notably higher over the past few sessions, steel stocks also came under pressure on the day, moving lower along with natural gas, biotechnology, and utilities stocks.

On the other hand, airline stocks showed a strong move to the upside, driving the NYSE Arca Airline Index up by 2.2 percent. United Continental (UAL) and American Airlines (AAL) posted standout gains.

Significant strength also emerged among gold stocks, which moved higher along with the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 2 percent, while Hong Kong's Hang Seng Index advanced by 0.5 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index edged down by 0.2 percent, the German DAX Index and the French CAC 40 Index rose by 0.2 percent and 0.4 percent, respectively.

In the bond market, treasuries finished the session modestly lower but well off their worst levels. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by 1.7 basis points to 1.797 percent.

Looking Ahead

Another batch of U.S. economic data is scheduled to be released Thursday morning, with traders likely to keep an eye on reports on weekly jobless claims, international trade, and labor productivity.

Earnings news is also likely attract attention, as a number of companies are due to release their quarterly results after the close of today's trading and before the start of trading on Thursday.