News Column

Stocks Moving Modestly Lower Following Recent Strength - US Commentary

May 28, 2014

WASHINGTON (Alliance News) - After trending higher over the past several sessions, stocks have moved modestly lower in early trading on Wednesday. The major averages have slid into negative territory, although selling pressure has remained somewhat subdued.

The major averages have climbed off their lows for the young session in the past few minutes but remain in the red. The Dow is down 33.43 points or 0.2% at 16,642.07, the Nasdaq is down 11.19 points or 0.3% at 4,225.88 and the S&P 500 is down 1.48 points or 0.1% at 1,910.43.

Profit taking is likely contributing to the early weakness on Wall Street following the recent gains, with the S&P 500 pulling back off the new record closing high set on Tuesday.

The recent gains also lifted the Dow back toward the record highs set earlier this month, while the tech-heavy Nasdaq ended the previous session at its best closing level in almost two months.

Nonetheless, a lack of major US economic data seems to be keeping some traders on the sidelines, limiting the downside for the markets.

Most of the major sectors are showing only modest moves, although some weakness is visible among commercial real estate, oil service, and steel stocks.

Peter Boockvar, chief market analyst at the Lindsey Group, noted that there continues to be a difference in the attitudes between professional and individual investors.

"As measured by Investors Intelligence, the professional investor is widely bullish," Boockvar said. "Bulls rose to 58.3 from 57.2, while Bears fell to 17.3 from 18.3. Bulls are just shy of the 3 readings seen in late December/early January, which were last seen in October '07, while bears are at 13 week lows."

Meanwhile, he added, "The new AAII read of the individual comes out tomorrow, but last week's Neutral camp was just shy of the highest since 2003, pointing to complete confusion."

Among individual stocks, shares of PetroLogistics (PDH) are moving sharply higher in early trading after the propylene producer agreed to be acquired by a subsidiary of Koch Industries in an all-cash transaction valued at approximately USD2.1 billion, including debt.

Luxury home builder Toll Brothers (TOL) is also seeing early strength after reporting better than expected second quarter results.

On the other hand, shares of DWS Inc. (DWS) have come under pressure after the discount shoe retailer reporter first quarter results that came in below estimates and cut its full-year guidance.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan'sNikkei 225 Index edged up by 0.2%, while Hong Kong'sHang Seng Index advanced by 0.6%.

Meanwhile, the major European markets are showing a lack of direction on the day. While the UK'sFTSE 100 Index has inched up by 0.1%, the French CAC 40 Index and the German DAX Index are just below the unchanged line.

In the bond market, treasuries are moving notably higher ahead of an auction of USD35 billion worth of five-year notes. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.2 basis points at 2.466%.

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Source: Alliance News

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