U.S. Stocks Showing A Lack Of Direction In Morning Trading

Following the upward move seen in the previous session, stocks have shown a lack of direction over the course of morning trading on Tuesday. The major averages have spent the morning bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 79.24 points or 0.2 percent at 32,651.96, the Nasdaq is down 19.06 points or 0.1 percent at 13,358.49 and the S&P 500 is down 2.96 points or 0.1 percent at 3,937.63.

The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets following recent volatility due to the jump in bond yields.

Some negative sentiment was generated by concerns about extended coronavirus lockdowns in Europe amid worries a new wave of infections.

German leaders agreed to extend the country’s lockdown until April 18, raising concerns about demand from Europe’s largest economy.

The news has contributed to a steep drop by the price of crude oil, with crude for May delivery plunging $2.69 to $58.87 a barrel.

However, a continued drop by treasury yields has helped keep selling pressure subdued, as the yield on the benchmark ten-year note continues to give back ground after reaching its highest levels in over a year last week.

Traders may also be looking ahead to Congressional testimony from Federal Reserve Chair Jerome Powell, who is due to appear virtually before the House Financial Services Committee this afternoon.

In prepared remarks, Powell reiterated the Fed’s recent assessment that indicators of economic activity and employment have turned up recently.

Powell noted that the economic recovery is “far from complete,” however, and stressed the Fed will continue to provide the support that the economy needs for “as long as it takes.”

On the U.S. economic front, a report released by the Commerce Department showed a nosedive by U.S. new home sales in the month of February.

The Commerce Department said new home sales plummeted by 18.2 percent to an annual rate of 775,000 in February after jumping by 3.2 percent to an upwardly revised rate of 948,000 in January.

Economists had expected new home sales to tumble by 5.2 percent to a rate of 875,000 from the 923,000 originally reported for the previous month.

With the much bigger than expected decrease, new home sales plunged to their lowest rate since hitting 698,000 last May.

Reflecting the lackluster performance by the broader markets, most of the major sectors are showing only modest moves on the day.

Oil service stocks have moved sharply lower over the course of the morning, however, with the Philadelphia Oil Service Index tumbling by 3.4 percent amid the steep drop by the price of crude oil.

Significant weakness is also visible among biotechnology stocks, as reflected by the 2.5 percent slump by the NYSE Arca Biotechnology Index.

Ionis Pharmaceuticals (IONS) is leading the sector lower after announcing its partner, Roche, has decided to discontinue dosing in the Phase III study of tominersen in manifest Huntington’s disease.

Airline, steel and gold stocks are also seeing notable weakness on the day, while software stocks are extending the rally seen in the previous session.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.6 percent, while China’s Shanghai Composite Index slumped by 0.9 percent.

Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index has inched up by 0.1 percent, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.4 percent.

In the bond market, treasuries remain firmly positive after an initial move to the upside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.3 basis points at 1.651 percent.