Stocks once again failed to sustain an early move to the upside and succumbed to selling pressure over the course of the trading session on Wednesday. The major averages pulled back well off their early highs and into negative territory.
While the Nasdaq managed to climbed back above the unchanged line, closing up 15.16 points or 0.2 percent at 8,980.77, the Dow slid 123.77 points or 0.5 percent to a four-month closing low of 26,957.59 and the S&P 500 fell 11.82 points or 0.4 percent to a nearly three-month closing low of 3,116.39.
Traders went bargain hunting early in the day, attempting to spark a rebound on Wall Street after stocks failed to sustain an initial upward move on Tuesday and pulled back sharply as the session progressed.
Nonetheless, lingering concerns about the coronavirus outbreak escalating into a pandemic that substantially slows global economic growth kept buying interest somewhat subdued.
Traders subsequently cashed in on the early strength on Wall Street, leading to another pullback by the broader markets.
The pullback by stocks coincided with a rebound by treasuries, which recovered from an early move to the downside and climbed into positive territory.
As a result of the rebound by treasuries, the yield on the benchmark ten-year note ended the session at a new record closing low.
The Trump administration has sought to downplay concerns about the coronavirus, with President Donald Trump accusing the media of exaggerating the situation in order to panic the markets.
Trump said in a post on Twitter this morning that he will be holding a press conference on the coronavirus with CDC representatives and others at 6 pm ET.
Meanwhile, traders shrugged off a Commerce Department report showing new home sales jumped to their highest level in over twelve years in the month of January.
The report said new home sales spiked by 7.9 percent to an annual rate of 764,000 in January after jumping by 2.3 percent to an upwardly revised rate of 708,000 in December.
Economists had expected new home sales to surge up by 2.3 percent to an annual rate of 710,000 from the 694,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 778,000 in July of 2007.
Energy stocks helped to lead the way back to the downside, with another steep drop by the price of crude oil weighing on the day. Crude for April delivery tumbled $1.17 to $48.73 a barrel, moving lower for the fourth straight session.
Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index plunged by 3.9 percent, while the NYSE Arca Oil Index and the Philadelphia Oil Service Index both dove by 2.9 percent.
Significant weakness was also visible among housing stocks, as reflected by the 2.8 percent slump by the Philadelphia Housing Sector Index. The index ended the session at its lowest closing level in over four months.
Toll Brothers (TOL) posted a steep loss after the luxury home builder reported fiscal first quarter results that missed analyst estimates on both the top and bottom lines.
Transportation, banking and steel stocks also came under pressure over the course of the session, while tobacco stocks saw considerable strength on the day.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index and China’s Shanghai Composite Index both slid by 0.8 percent, while Australia’s S&P/ASX 200 Index tumbled by 2.3 percent.
Meanwhile, the major European markets turned mixed after coming under pressure earlier in the day. While the German DAX Index edged down by 0.1 percent, the French CAC 40 Index crept up by 0.1 percent and the U.K.’s FTSE 100 Index rose by 0.4 percent.
In the bond market, treasuries turned higher over the course of the session after an early pullback. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2 basis points to a record closing low of 1.310 percent.
A slew of U.S. economic data is scheduled to be released on Thursday, including reports on weekly jobless claims, durable goods orders and pending home sales.
However, the data is likely to be overshadowed by any developments on the coronavirus front, with traders likely to keep a close eye on Trump’s press conference on the situation later this evening.
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