Dow Turns Positive But Nasdaq, S&P 500 Remain Firmly In The Red

Following an early move to the downside, stocks remain mostly lower in mid-day trading on Friday. The Dow has shown a notable rebound over the course of the session, but the broader Nasdaq and S&P 500 remain firmly negative.

Currently, the Dow is up 28.24 points or 0.1 percent at 31,522.56 after falling more than 200 points in early trading. Meanwhile, the Nasdaq is down 233.67 points or 1.7 percent at 13,640.79 and the S&P 500 is down 21.51 points or 0.6 percent at 3,885.20.

The early weakness on Wall Street partly reflected concerns about the outlook for inflation following the recent advance by bond yields.

The yield on the benchmark ten-year note ended last Friday’s trading at its highest closing level in almost a year and is currently hovering near the same level.

Bond yields remain at historically low levels, but the recent increase may still spook investors already concerned that stocks are overbought.

Traders are also looking ahead to two days of Congressional testimony by Federal Reserve Chair Jerome Powell.

Powell is likely to reiterate that the Fed plans to maintain easy monetary policy for the foreseeable future as the economy continues to recover from the coronavirus pandemic.

The Fed has recently signaled that it is not concerned about inflation, suggesting that inflation should exceed its 2 percent target for some time before the central bank considers raising interest rates.

In U.S. economic news, the Conference Board released a report showing a bigger than expected increase by its index of leading U.S. economic indicators in the month of January.

The Conference Board said its leading economic index climbed by 0.5 percent in January after rising by an upwardly revised 0.4 percent in December.

Economists had expected the leading economic index to rise by 0.3 percent, matching the increase originally reported for the previous month.

Sector News

Software stocks continue to see substantial weakness in mid-day trading, with the Dow Jones U.S. Software Index tumbling by 2.6 percent.

Considerable weakness also remains visible among utilities stocks, as reflected by the 2.5 percent slump by the Dow Jones Utility Average. With the drop, the average has fallen to its lowest intraday level in over four months.

Semiconductor stocks have also shown a significant move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 1.9 percent.

On the other hand, energy stocks have moved sharply higher along with the price of crude oil, with crude for March delivery jumping $1.83 to $61.07 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 5.2 percent and the NYSE Arca Oil Index is up by 4.1 percent.

Airline stocks also continue to see substantial strength on the day, driving the NYSE Arca Airline Index up by 4.4 percent to its best intraday level in a year.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday, although Japan’s Nikkei 225 Index bucked the downtrend and rose by 0.5 percent. China’s Shanghai Composite Index tumbled by 1.5 percent, while South Korea’s Kospi fell by 0.9 percent.

European stocks also saw modest weakness on the day but closed well off their worst levels. While the French CAC 40 Index edged down by 0.1 percent, the U.K.’s FTSE 100 Index dipped by 0.2 percent and the German DAX Index fell by 0.3 percent.

In the bond market, treasuries have shown a lack of direction over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.348 percent.