Dow Climbs Well Off Worst Levels, Nasdaq, S&P 500 Remain Firmly Negative

Stocks moved sharply lower early in the session on Tuesday and remain firmly negative in afternoon trading. The drop on the day comes after the major averages showed a substantial rebound from an early sell-off in the previous session.

Currently, the major averages all remain in the red, although the Dow has climbed well off its worst levels. While the Dow is down 213.91 points or 0.6 percent at 34,150.59, the Nasdaq is down 299.55 points or 2.2 percent at 13,555.58 and the S&P 500 is down 61.05 points or 1.4 percent at 4,349.08.

Lingering concerns about the outlook for monetary policy contributed to the early pullback on Wall Street as the Federal Reserve’s two-day meeting gets underway.

The Fed is likely to leave interest rates unchanged when announcing its decision on Wednesday, although the accompanying statement could hint at the first rate hike as early as the next meeting in mid-March.

CME Group’s FedWatch Tool is currently indicating an 84.8 percent chance that the Fed will raise interest rates by a quarter point in March.

The subsequent recovery attempt by the Dow is partly due to a rally by shares of American Express (AXP), with the credit card giant jumping by 7 percent after reporting better than expected fourth quarter results.

Dow components Johnson & Johnson (JNJ) and IBM Corp. (IBM) are also posting strong gains after reporting fourth quarter earnings that exceeded analyst estimates.

On the other hand, shares of General Electric (GE) have moved sharply lower after the conglomerate reported fourth quarter earnings that beat analyst estimates but weaker than expected revenues.

In U.S. economic news, the Conference Board released a report showing consumer confidence pulled back by less than expected in the month of January.

The Conference Board said its consumer confidence index dipped to 113.8 in January after climbing to a revised 115.2 in December. Economists had expected the index to drop to 111.9 from the 115.8 originally reported for the previous month.

Sector News

Semiconductor stocks continue to turn in some of the market’s worst performances in afternoon trading, resulting in a 3.3 percent nosedive by the Philadelphia Semiconductor Index.

Nvidia (NVDA) is posting a steep loss after a report from Bloomberg said the graphics chipmaker is preparing to abandon its $40 billion acquisition of Arm Ltd. from SoftBank Group Corp.

Substantial weakness also visible among software stocks, as reflected by the 3 percent slump by the Dow Jones U.S. Software Index.

Housing stocks also continue to see considerable weakness after helping lead the rebound on Monday, with the Philadelphia Housing Sector Index down by 2.8 percent after spiking by 3.1 percent in the previous session.

Retail, networking and transportation stocks are also showing notable moves to the downside, while energy stocks have moved sharply higher along with the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Tuesday. Japan’s Nikkei 225 Index tumbled by 1.7 percent, while China’s Shanghai Composite Index plunged by 2.6 percent.

Meanwhile, the major European markets rebounded following recent weakness. While the U.K.’s FTSE 100 Index jumped by 1 percent, the German DAX Index and the French CAC 40 Index climbed by 0.8 percent and 0.7 percent, respectively.

In the bond market, treasuries have given back ground after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.9 basis points at 1.764 percent.

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