U.S. Stocks Regain Ground After Initial Drop But Remain Modestly Lower

After coming under pressure early in the session, stocks have regained ground over the course of morning trading on Wednesday. The major averages have climbed well off their early lows but are currently in negative territory.

Currently, the major averages are posting modest losses on the day. The Dow is down 37.58 points or 0.1 percent at 36,282.40, the Nasdaq is down 60.95 points or 0.4 percent at 15,825.60 and the S&P 500 is down 5.95 points or 0.1 percent at 4,679.30.

Concerns about the impact of elevated inflation contributed to the initial weakness on Wall Street after the Labor Department released a report showing a bigger than expected increase in U.S. consumer prices in the month of October.

The report said the consumer price index jumped by 0.9 percent in October after rising by 0.4 percent in September. Economists had expected consumer prices to climb by 0.6 percent.

Excluding higher prices for food and energy, core consumer prices still increased by 0.6 percent in October after inching up by 0.2 percent in September. Core prices were expected to rise by 0.4 percent.

The Labor Department also said the annual rate of growth in consumer prices accelerated to 6.2 percent in October from 5.4 percent in September, reaching the highest level since November of 1990.

The annual rate of growth in core prices also accelerated to 4.6 percent from 4.0 percent, reflecting the biggest jump in prices since August of 1991.

The acceleration in the rate of consumer price inflation raised concerns about the outlook for interest rates even though the Federal Reserve has signaled it will not be in a hurry to begin raising rates.

Selling pressure has waned over the course of the morning, however, as a separate report released by the Labor Department showed another modest decrease in first-time claims for U.S. unemployment benefits in the week ended November 6th.

The report said initial jobless claims edged down to 267,000, a decrease of 4,000 from the previous week’s revised level of 271,000.

Economists had expected jobless claims to dip to 265,000 from the 269,000 originally reported for the previous week.

Jobless claims decreased for the sixth consecutive week, once again falling to their lowest level since hitting 256,000 in the week ended March 14, 2020.

Energy stocks are seeing considerable weakness on the day amid a decrease by the price of crude oil. Crude for December delivery is falling $0.42 to $83.73 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 2.4 percent and the NYSE Arca Oil Index is down by 1.6 percent.

Steel stocks are also extending the pullback seen in the previous session, resulting in a 1.1 percent drop by the NYSE Arca Steel Index.

On the other hand, gold stocks have shown a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 2.9 percent.

The rally by gold stocks comes amid a sharp increase by the price of the precious metal, with gold for December delivery jumping $28.30 to $1,859.10 an ounce.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slid by 0.6 percent, while China’s Shanghai Composite Index fell by 0.4 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the U.K.’s FTSE 100 Index has advanced by 0.7 percent, the German DAX Index is up by 0.2 percent and the French CAC 40 Index is up by 0.1 percent.

In the bond market, treasuries are giving back ground following the consumer price inflation data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8 basis points at 1.512 percent.