U.S. Stocks Come Under Pressure After Initially Showing A Lack Of Direction

(RTTNews) - Stocks came under pressure over the course of the trading day on Wednesday, extending the notable downward move seen in the past few sessions. The major averages showed a lack of direction early in the session but eventually slid firmly into negative territory.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow slid 280.44 points or 0.9 percent to 31,510.43, the Nasdaq fell 66.93 points or 0.6 percent to 11,816.20 and the S&P 500 dropped 31.16 points or 0.8 percent to 3,955.00.

With the decrease on the day, the major averages closed lower for the fourth consecutive session, falling to their lowest levels in a month.

The continued weakness on Wall Street reflected lingering concerns about higher interest rates following some hawkish comments from Federal Reserve officials.

In remarks earlier this morning, Cleveland Federal Reserve President Loretta Mester said she expects the Fed to raise interest rates above 4 percent by early next year.

Mester also said she does not anticipate the Fed cutting interest rates in 2023, with the central bank likely to keep rates at an elevated level in an effort to combat inflation.

Meanwhile, payroll processor ADP released a report showing private sector employment in the U.S. increased by much less than expected in the month of August.

ADP said private sector employment rose by 132,000 jobs in August after jumping by nearly 270,000 jobs in July. Economists had expected employment to surge by 288,000 jobs.

"Our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy's conflicting signals," said ADP chief economist Nela Richardson. "We could be at an inflection point, from super-charged job gains to something more normal."

ADP suspended its jobs report for June and July as the firm revamped its methodology and entered into a partnership with the Stanford Digital Economy Lab.

Sector News

Airline stocks moved sharply lower over the course of the session, dragging the NYSE Arca Airline Index down by 2.3 percent to its lowest closing level in a month.

Significant weakness also emerged among gold stocks, as reflected by the 1.6 percent drop by the NYSE Arca Gold Bugs Index. With the decrease, the index slumped to a more than two-year closing low.

The weakness in the gold sector came as the price of the precious metal fell to its lowest levels in over a month, with gold for December delivery slipping $10.10 to $1,726.20 an ounce.

Steel, computer hardware and chemical stocks also came under pressure as the day progressed, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while South Korea's Kospi advanced by 0.9 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index tumbled by 1.4 percent, the U.K.'s FTSE 100 Index and the German DAX Index slumped by 1.1 percent and 1.0 percent, respectively.

In the bond market, treasuries moved modestly lower after showing a lack of direction early in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.3 basis points to 3.133 percent.

Looking Ahead

Reports on weekly jobless claims, manufacturing activity and construction spending are likely to attract attention on Thursday, although trading activity may be somewhat subdued ahead of Friday's monthly jobs report.