U.S. Turning In Mixed Performance Ahead Of Powell Speech

Following the lackluster performance seen in the previous session, stocks continue to experience choppy trading Wednesday morning ahead of a highly anticipated speech by Federal Reserve Chair Jerome Powell later this afternoon.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 28.38 points or 0.3 percent at 11,012.16, the S&P 500 is down 7.15 points or 0.2 percent at 3,950.48 and the Dow is down 162.33 points or 0.4 percent at 33,690.20.

Traders seem reluctant to make significant remarks ahead of Powell’s remarks at a hybrid Brookings Institution event, which are likely to be closely watched for additional clues about the outlook for interest rates.

While the central bank is widely expected to slow the pace of rate hikes next month, recent comments from Fed officials have led to uncertainty about how high rates will go.

“U.S. stocks are entering a holding pattern ahead of Fed Chair Powell’s speech as some investors look for him to somewhat ease up on the hawkish rhetoric,” said Edward Moya, senior market analyst at OANDA.

He added, “The economy is weakening and traders want to see the Fed Chair deliver a clear message that they will downshift their pace of tightening and are close to hitting the breaks.”

The choppy trading on Wall Street also comes following the release of a slew of U.S. economic data that has painted a somewhat mixed picture.

Before the start of trading, payroll processor ADP released a report showing private sector job growth in the U.S. fell well short of economist estimates in the month of November.

ADP said private sector employment increased by 127,000 jobs in November after surging by an unrevised 239,000 jobs in October. Economists had expected employment to jump by another 200,000 jobs.

“Turning points can be hard to capture in the labor market, but our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains,” said ADP chief economist Nela Richardson.

A separate report from the National Association of Realtors showed a continued decrease in pending home sales in the month of October.

Meanwhile, revised data released by the Commerce Department showed the U.S. economy grew by more than previously estimated in the third quarter.

The report said real gross domestic product spiked by 2.9 percent in the third quarter compared to the previously reported 2.6 percent surge. Economists had expected the pace of GDP growth to be unrevised.

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Banking stocks have shown a significant move to the downside, however, with the KBW Bank Index slumping by 1.7 percent.

Considerable weakness has also emerged among housing stocks, as reflected by the 1.5 percent drop by the Philadelphia Housing Sector Index.

Computer hardware and airline stocks have also moved lower on the day, while some strength is visible among biotechnology stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. China’s Shanghai Composite Index inched up by 0.1 percent and Hong Kong’s Hang Seng Index surged by 2.2 percent, although Japan’s Nikkei 225 Index once again bucked the uptrend and dipped by 0.2 percent.

The major European markets have also moved to the upside on the day. While the U.K.’s FTSE 100 Index has jumped by 0.9 percent, the French CAC 40 Index is up by 0.5 percent and the German DAX Index is up by 0.1 percent.

In the bond market, treasuries have come under pressure after seeing initial strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.5 basis points 3.783 percent.