Late-Day Pullback Leads To Mixed Close On Wall Street

Stocks moved higher for much of the trading session on Wednesday before coming under pressure going into the close. The major averages showed notable moves to the downside, but the Dow and the S&P 500 managed to remain in positive territory.

The major averages eventually ended the session mixed. While the Nasdaq fell 36.80 points or 0.3 percent to 12,771.11, the Dow rose 114.32 points or 0.4 percent to 30,129.83 and the S&P 500 inched up by 2.75 points or 0.1 percent to 3,690.01.

The late-day pullback on Wall Street may have reflected profit taking, as traders cashed in on some of this year’s gains ahead of the upcoming holidays.

Earlier in the day, stocks benefited from a positive reaction a slew of U.S. economic data, including a report from the Labor Department showing a significant pullback in first-time claims for unemployment benefits in the week ended December 19th.

The report said initial jobless claims slid to 803,000, a decrease of 89,000 from the previous week’s revised level of 892,000.

Economists had expected jobless claims to come in unchanged compared to the 885,000 originally reported for the previous week.

The unexpected pullback came after jobless claims reached their highest level since early September in the previous week.

The Commerce Department also released a report showing new orders for U.S. manufactured durable goods increased by more than expected in the month of November.

Buying interest was somewhat subdued, however, as separate reports from the Commerce Department showed steep drops in personal income and new home sales.

Uncertainty about a coronavirus relief package approved by Congress also led to cautious trading after President Donald Trump slammed the bill as a “disgrace” in a video posted on Twitter on Tuesday.

Trump called on Congress to amend the bill to increase the direct payments to individuals to $2,000 from $600 and “get rid of the wasteful and unnecessary items.”

Democrats expressed support for increasing the size of the direct payments, but the idea is likely to face resistance in the Republican-controlled Senate.

The stimulus is attached to a government spending bill that Trump needs to sign by Monday to avoid a government shutdown.

Sector News

Airline stocks showed a significant rebound after moving sharply lower over the past few sessions, driving the NYSE Arca Airline Index up by 3.4 percent. The index bounced off its lowest closing level in a month.

An increase by the price of crude oil also contributed to a rebound by energy stocks, with crude for February delivery jumping $1.10 to $48.12 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index soared by 3.4 percent, the NYSE Arca Oil Index surged up by 3.3 percent and the NYSE Arca Natural Gas Index shot up by 3.1 percent.

Banking stocks also showed a substantial move to the upside on the day, resulting in a 2.9 percent spike by the KBW Bank Index. The index reached its best closing level in nearly ten months.

Gold, steel and tobacco stocks also saw notable strength on the day, while some weakness was visible among software and housing stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index climbed by 0.7 percent, the French CAC 40 Index and the German DAX Index surged up by 1.1 percent and 1.3 percent, respectively.

In the bond market, treasuries came under pressure amid the significant pullback in weekly jobless claims. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.7 basis points to 0.955 percent.

Looking Ahead

Trading activity is likely to be light in a shortened trading session on Thursday, as some traders look to get a head start on the holiday weekend.

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