RTTNews - Stocks lingered near the unchanged mark for much of the trading day before a tame late session sell-off resulted in a modestly lower close on Wednesday. The major averages all closed on the downside, as traders largely shrugged off today's economic data and looked towards key employment data to close out the week.

This afternoon, the Federal Reserve released the minutes of its August meeting, indicating that the members of the Federal Open Market Committee are more confident that the economic downturn is ending and that growth is likely to resume in the second half of the year.

The committee members said that their projections for the second half of 2009 and for subsequent years had not changed appreciably since the June meeting, except that they now saw smaller downside risks.

Nonetheless, while the members saw signs of stabilization in consumer spending and housing, most agreed that the economy is likely to recover only slowly during the second half of this year and all saw it as still vulnerable to adverse shocks.

In other economic news today, the Commerce Department issued a report showing that factory orders increased by less than economists had been expecting in July.

Meanwhile, Automatic Data Processing, Inc. (ADP) said that non-farm private employment fell by more than economists had been anticipating in August, although the loss of jobs still marked the smallest drop in employment since September of 2008.

Separately, the Labor Department released its revised report on labor productivity in the second quarter, showing that productivity increased by more than previously estimated amid a smaller than expected drop in output.

The major averages saw some downside in late session trading, resulting in a lower close. The Dow closed down 29.93 points or 0.3 percent at 9,280.67, the Nasdaq fell by 1.82 points or 0.1 percent to 1,967.07 and the S&P 500 declined by 3.29 points or 0.3 points to close at 994.75.

Sector News

Housing stocks saw some of the day's weakest performances, with the Philadelphia Housing Sector Index posting a 2.7 percent loss on the day. The index pulled back further off of the eleven-month closing high it set late last month.

The index was led lower by shares of Radian Group (RDN), which plunged by 8.5 percent on the session. The stocks moved further off the nineteen-month closing high set last month.

Significant weakness was also visible among banking and commercial real estate stocks, with the Kbw Bank Index and the Morgan Stanley REIT Index closing down by 2.3 percent and 2 percent, respectively.

The banking index fell further off a nine-month closing high, while the commercial real estate index remained stuck in a recent trading range.

While biotechnology, networking, and oil service stocks also moved notably lower, gold stocks saw some of the day's strongest performances. The NYSE Arca Gold Bugs Index surged up 9.3 percent to close at its best level in three months. The strength in the sector came as the price of gold jumped $22 an ounce to a three-month high.

Health insurance stocks also rose by substantial margins, with the Morgan Stanley Healthcare Payor Index closing up 3.6 percent, bouncing off of the three-week low set in the previous session.

Dow Components

JP Morgan Chase (JPM) and Merck (MRK) posted the Dow's steepest losses, with both retreating by 1.9 percent. The stocks continued their move away from their best closing prices in roughly eleven months set in August.

Shares of Intel (INTC) also fell, posting a loss of 1.3 percent on the day. With the loss, the stock backed further away from the eleven-month closing high reached earlier this week.

While Bank Of America (BAC), Disney (DIS) and General Electric (GE) also pulled back on the day, Coca-Cola (KO) turned in one of the strongest performance in the blue chip index. The beverage giant closed up 2.6 percent, although off its one-month intraday high.

Cisco (CSCO) and Hewlett Packard (HPQ) also closed higher, although by more modest margins, advancing by 1.8 percent and 0.9 percent, respectively. While Cisco remained stuck in a recent trading range, Hewlett Packard continued to hover near last month's eleven-month closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Wednesday. Japan's benchmark Nikkei 225 Index closed down by 2.4 percent, and Hong Kong's Hang Seng Index fell by 1.8 percent.

The major European markets posted more modest losses, with the French CAC 40 and German DAX Index falling by 0.3 percent and 0.1 percent, respectively, while the U.K.'s FTSE 100 slipped by less than a tenth of a percent.

In the bond markets, treasuries saw notable strength amid the uncertainty on Wall Street. Subsequently, the yield on the benchmark ten-year note closed at 3.295 percent, posting a loss of 8.0 basis points.

Looking Ahead

The Labor Department is due to release its customary weekly jobless claims report for the week ended August 28th at 8:30 a.m. ET on Thursday. Economists expect jobless claims to come in nearly unchanged compared to last week's 570,000.

The Institute for Supply Management is also scheduled to release the results of its service sector survey shortly after the opening bell. The service sector index is expected show a reading of 48 for August after falling to 46.4 in July.

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