RTTNews - After seeing uncertainty for much of the session, stocks have largely turned lower and are seeing considerable weakness in mid-afternoon trading on Wednesday. The major averages have all drifted into negative territory, with the Nasdaq and S&P 500 ceding thin gains posted earlier.
Equities struggled to find direction following a mixed report from the housing sector released earlier this morning. Data from the National Association of Realtors showed that existing home sales in the month of April increased by slightly more than economists had been expecting, although the report also showed a considerable increase in housing inventories.
Nonetheless, stocks came under selling pressure following the Treasury Department's auction of $35.0 billion worth of 5-year notes. The sale drew a high-yield of 2.310 percent while attracting moderately strong demand, with the bid-to-cover ratio coming in at 2.32.
Traders are also digesting President Barack Obama's remarks on the progress seen in the first 100 days following the passage of his administration's landmark stimulus bill. In an earlier statement, he explained that the $467 million in energy would go to expand and accelerate the development, deployment, and use of geothermal and solar energy throughout the United States.
In recent trading, the major averages have bounced off their new lows for the session, although they remain stuck below the unchanged line. The Dow is currently 99.24 at 8,374.25, the Nasdaq is down 3.89 at 1,746.54 and the S&P 500 is down 8.27 at 902.06.
Most of the Dow components are trading in negative territory, contributing to the triple digit loss being shown by the blue chip index in mid-afternoon trading.
General Motors (GM) is once again turning in one of the Dow's worst performances, with the auto giant currently down 17.2 percent, as the bankruptcy of the American icon seems inevitable. Shares of GM have moved well off their recent highs, pulling back near multi-decade lows.
The Dow is also being pulled down by shares of Procter & Gamble (PG) and General Electric (GE), which are down by 3 percent and 2.3 percent, respectively. With the retreat, the Dow components are giving back some of their recent gains.
On the other hand, the Dow's losses are being mitigated by Bank of America (BAC) which is up by 2.2 percent on the session following news that the banking giant is continuing to raise capital in wake of the government's stress test results released earlier this month.
The major sectors are turning in a disappointing performance, helping the major indices to add to their losses in afternoon dealing.
Banking stocks are showing weakness, as reflected by the 2.7 percent decline being shown by the S&P Banks Index. Notably, shares of KeyBank (KEY) have slipped by 6.2 percent on the day, falling to a 3-month intraday low. With the decline, shares of the banking giant are poised to finish at a 20-year closing low.
Commercial real estate stocks are also posting steep losses, with the Morgan Stanley Real Estate Index dropping by 3.3 percent on the day. With the retreat, the index is continuing its pullback from a 2-week high set in the previous session.
Airline stocks are continuing to tread on the downside, with the Amex Airline Index falling by 3.6 percent. The weakness in the oil-sensitive sector comes amid a notable increase by the price of crude oil, which has risen more than $1 a barrel.
While railroad, chemical, and utilities stocks are also under pressure, semiconductor stocks continue to turn in some of the day's best performances. The Philadelphia Semiconductor Index is up 2.4 percent, rising to a nearly 3-week intraday high.
Steel stocks are also moderating the day's losses, with the Amex Steel Index climbing by 1.5 percent on the session after reaching a 7-month intraday high.
In Focus: Housing Data, Fed Buyback
Earlier in the day, the National Association of Realtors said that existing home sales rose 2.9 percent to an annual rate of 4.68 million units in April from a downwardly revised rate of 4.55 million units in March.
Economists had expected sales to rise to a 4.66 million unit rate from the 4.57 million unit rate originally reported for the previous month.
While the pace of existing home sales increased compared to the previous month, total housing inventories at the end of April represented a 10.2-month supply compared with a 9.6-month supply in March.
A separate report from the housing sector released earlier showed that mortgage application volume tumbled more than 14 percent last week, as refinance activity plunged nearly 19 percent.
The Mortgage Bankers Association revealed that its market index of mortgage application volume fell 14.2 percent on a seasonally adjusted basis for the week of May 22nd. The Market Composite Index was 786.0 compared to 915.9 in the previous week.
In corporate news, Bank of America said that it raised almost $26 billion in its capital plan since the stress test results were announced and is well on its way to reaching the $33.9 billion indicated Supervisory Capital Assessment Program or SCAP buffer set by the Federal Reserve.
The company announced last week that it raised $13.5 billion through issuing 1.25 billion shares in an at-the-market common stock offering. It has also sold part of its holdings in China Construction Bank, generating a capital gain.
In other news, the Federal Reserve continued its treasury buyback program this morning, the second quantitative easing move of the week.
The New York arm of the Federal Reserve purchased $6.0 billion worth of securities with maturity dates ranging from May of 2012 to August of 2013. The day's buyback saw a total of $18.82 billion in treasuries submitted for the purchase.
This week, the Fed purchased $7.55 billion in treasuries bringing the total to $130.53 billion since the program began on March 25th.
In overseas trading, stock markets across the Asia-Pacific region finished notably higher on Wednesday. Japan's benchmark Nikkei 225 Index rose 1.4 percent, while Hong Kong's Hang Seng Index jumped by 5.3 percent.
The major European markets posted more modest gains, with the U.K.'s FTSE 100 Index finishing up by 0.1 percent, while the French CAC 40 Index and the German DAX closed up 0.8 percent and 0.3 percent, respectively.
In the bond markets, treasuries continue to plummet on the day. Subsequently, the yield on the benchmark ten-year note is up to 3.697 percent, a jump of 20.4 basis points on the day.
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