U.S. Stocks Finish Choppy Trading Day Little Changed

Stocks showed a lack of direction over the course of the trading day on Wednesday, with the major averages bouncing back and forth across the unchanged line following the pullback seen in the previous session.

The major averages eventually ended the day narrowly mixed. While the tech-heavy Nasdaq dipped 50.66 points or 0.3 percent to 19,230.74, the S&P 500 crept up 1.39 points or less than a tenth of a percent to 5,985.38 and the Dow inched up 47.21 points or 0.1 percent to 43,958.19.

The choppy trading on Wall Street came following the release of closely watched consumer price inflation data that came in line with economist estimates.

The Labor Department said its consumer price index crept up by 0.2 percent in October, matching the upticks seen in each of the three previous months as well as expectations.

The report also said the annual rate of consumer price growth accelerated to 2.6 percent in October from 2.4 percent in September. The faster growth also came in line with economist estimates.

Excluding food and energy prices, core consumer prices climbed by 0.3 percent in October, matching the increases seen in each of the two previous months along with expectations.

The annual rate of core consumer price growth was unchanged from the previous month at 3.3 percent, which was also in line with estimates.

While the data increased confidence the Federal Reserve will continue lowering interest rates next month, inflation remaining somewhat sticky led to uncertainty about the likelihood of future rate cuts.

“The 2.6% year-over-year print, while expected, may keep the Fed mindful from declaring victory over its campaign to quell inflation,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

CME Group’s FedWatch Tool is currently indicating an 82.3 percent chance of another quarter point rate cut in December but a 60.2 percent chance rates will then be left unchanged in January.

Sector News

Airline stocks saw substantial weakness on the day, with the NYSE Arca Airline Index plummeting by 7.3 percent. The index continued to give back ground after reaching its best closing level in over a year on Monday.

A nosedive by shares of Spirit Airlines (SAVE) weigh on the sector, with the discount airline plunging by 59.3 percent after a report from the Wall Street Journal said Spirit is preparing to file for bankruptcy protection after merger talks with Frontier Airlines (ULCC) broke down.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.0 percent slump by the Philadelphia Semiconductor Index.

Oil service, steel and computer hardware stocks also saw considerable weakness, while oil producer and retail stocks showed strong moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index tumbled by 1.7 percent, while Hong Kong’s Hang Seng Index edged down by 0.1 percent.

Meanwhile, the major European markets finished the day narrowly mixed. While the U.K.’s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index edged down by 0.1 percent and the German DAX Index dipped by 0.2 percent.

In the bond market, treasuries moved modestly lower over the course of the session after seeing early strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up 1.9 basis points to a four-month closing high of 4.451 percent after hitting a low of 4.359 percent.

Looking Ahead

Reports on producer price inflation and weekly jobless claims are likely to attract attention on Thursday along with remarks by Fed Chair Jerome Powell.

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