Stocks Remain Mostly Lower Following Initial Downward Move - U.S. Commentary

(RTTNews) - After moving sharply lower in early trading on Wednesday, stocks have regained some ground over the course of the session. The major averages have climbed well off their worst levels of the day but remain stuck in negative territory.

Currently, the major averages are posting moderate losses. The Dow is down 90.33 points or 0.6 percent at 15,838.23, the Nasdaq is down 11.32 points or 0.3 percent at 4,086.64 and the S&P 500 is down 7.26 points or 0.4 percent at 1,785.24.

The initial weakness on Wall Street was partly due to lingering concerns about emerging markets, which saw considerable volatility following interest rate hikes in Turkey and South Africa.

A negative reaction to the latest earnings news also weighed on the markets, as investors were disappointed with the guidance provided by some big-name companies.

Shares of Yahoo (YHOO) have tumbled by 6.4 percent after the online media giant reported better than expected fourth quarter earnings but provided cautious guidance for the first quarter.

Boeing (BA) and AT&T (T) have also come under pressure after reporting better than expected fourth quarter earnings but issuing disappointing full-year forecasts.

The major averages did not see much follow-through on their initial downward moves, however, as traders seemed reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement this afternoon.

The Fed is widely expected to announce a second $10 billion reduction in the pace of its asset purchases to $65 billion a month.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "With respect to the Fed today, let's assume that Bernanke wants his last meeting to be as boring as possible defined as doing what the market exactly expects them to do."

Bargain hunting has helped to lift the major averages well off their lows for the session since then, although the markets have maintained a negative bias.

Sector News

While most of the major sectors have recovered from the initial downward move, considerable weakness remains visible among airline stocks. The NYSE Arca Airline Index is down by 1.6 percent, nearly offsetting the gain posted in the previous session.

LATAM Airlines (LFL) and Allegiant Travel (ALGT) are turning in two of the airline sector's worst performances, falling by 3.8 percent and 3.6 percent, respectively.

Tobacco stocks also remain under pressure in mid-day trading, with the NYSE Arca Tobacco Index down by 1.2 percent. The index is on pace to end the session at a nine-month closing low.

On the other hand, gold stocks have shown a strong move to the upside on the day, moving higher along with the price of the precious metal. With gold for February delivery climbing $14.10 to $1,264.90 an ounce, the NYSE Arca Gold Bugs Index is up by 1.3 percent.

Significant strength has also emerged among chemical stocks, as reflected by the 1.3 percent gain being posted by the Dow Jones Chemicals Index. Dow Chemical (DOW) has helped lead the sector higher after reporting better than expected fourth quarter results and raising its dividend.

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 2.7 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

Meanwhile, the major European markets came under pressure on the day. While the U.K.'s FTSE 100 Index dipped by 0.4 percent, the French CAC 40 Index and the German DAX Index fell by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries are moving moderately higher ahead of the announcement from the Fed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.9 basis points at 2.717 percent.