News Column

Stocks Moving Modestly Lower In Early Trading - US Commentary

May 14, 2014

WASHINGTON (Alliance News) - While selling pressure has remained relatively subdued, stocks are seeing modest weakness in early trading on Wednesday. The major averages have all dipped into negative territory after ending the previous session mixed.

Currently, the major averages are posting modest losses on the day. The Dow is down 52.37 points or 0.3% at 16,663.07, the Nasdaq is down 6.36 points or 0.2% at 4,123.80 and the S&P 500 is down 3.87 points or 0.2% at 1,893.58.

The early weakness on Wall Street is partly due to profit taking, with the Dow and the S&P 500 giving back some ground after ending the previous session at new record closing highs.

Troubling inflation data is also weighing on the markets, with a report from the Labor Department showing that producer prices rose at their fastest pace in over a year in April.

The Labor Department said its producer price index for final demand rose by 0.6% in April following a 0.5% increase in March. Economists had been expecting producer prices to edge up by about 0.2%.

Core producer prices, which exclude food and energy, also showed continued growth, climbing by 0.5% in April after rising by 0.6% in March. Core prices had been expected to rise by 0.2%.

"While certainly different from consumer prices in terms of market reaction and Fed policy, we've now seen 2 months in a row of sharp gains in wholesale pricing that bears watching especially in an environment where many don't think we have any inflation," said Peter Boockvar, chief market analyst at the Lindsey Group.

He added, "We actually have seen massive monetary inflation that has showed up in asset prices of all kinds but hasn't yet spilled into the conventional PPI, CPI, PCE figures until maybe now?"

Uncertainty about the near-term outlook for the markets has helped to limit the downside for the markets, however, with traders likely looking ahead to the release of a slew of key economic data on Thursday.

Financial and transportation stocks are seeing some weakness in early trading, although most of the major sectors are showing only modest moves.

Among individual stocks, shares of Fossil (FOSL) are moving sharply lower in early trading after the fashion accessory maker reported better than expected first quarter results but provided disappointing second quarter guidance.

Video game publisher Take-Two Interactive (TTWO) has also come under pressure after forecasting a wider than expected fiscal first quarter loss.

On the other hand, shares of Arotech (ARTX) are rallying after the defense and security products company reported better than expected first quarter earnings.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index edged down by 0.1%, while Hong Kong'sHang Seng Index surged up by 1%.

Meanwhile, the major European markets are all seeing modest weakness on the day. While the German DAX Index is just below the unchanged line, the UK'sFTSE 100 Index and the French CAC 40 Index are both down by 0.1%.

In the bond market, treasuries have shown a strong move to the upside, extending the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.9 basis points at 2.559%.

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Source: Alliance News

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