RTTNews - After seeing a higher open amid a continued increase in commodities prices, stocks were unable to hold onto their early gains and have slipped into the red on Wednesday. The major averages are all in negative territory in early afternoon trading, although they have moved off their lows.
With a lack of forward looking economic indicators to guide near-term prospects, traders have turned to profit taking, but continued optimism about the outlook for the economy has helped to keep the pullbacks at a mild level.
Traders are likely look to the results of the Treasury Department's monthly auction of benchmark ten-year notes this afternoon to evaluate their position in the bond market. The Treasury will sell $19.0 billion worth of the notes, with the results of the auction due to be released at 1:00 p.m. ET.
The bond market has been in focus recently, as rising interest rates despite the Federal Reserve's pledge to keep rates low through quantitative easing have raised some concern.
In recent trading, the Dow briefly peeked back above the unchanged line, although it has moved back to the downside since then. The Dow is currently down 29.55 at 8,733.51, the Nasdaq is down 15.32 at 1,844.81 and the S&P 500 is down 4.43 at 938.00.
The major sectors are largely in the red, leading the major averages to post mild losses in afternoon trading.
Some of the day's worst performances are being turned in by electronic storage stocks, as reflected by the 1.7 percent pullback by the Amex Disk Drive Index. With the decline the index is pulling back off the eight-month high set in the previous session.
Imation (IMN) has helped to lead the storage sector lower, slipping by 3.2 percent. The day's loss has dragged the stock down to its worst intraday level in over a month.
Notable weakness has also emerged among real estate stocks, with the Morgan Stanley Real Estate Index falling by 2.6 percent on the day. The retreat has led the index further away from the four-month closing high set late last week.
Further, airline, trucking and railroad stocks are continuing their downward moves in afternoon dealing. The move comes as the price of crude oil continues to build on its highest levels of the year, rising to a price of $71.18 per barrel.
Moderating some of the day's losses are strong gains utility stocks, as reflected by the 1.5 percent climb being shown by the Dow Jones Utilities Average. Modest gains also continue to be shown by steel, natural gas, and oil stocks, which have been boosted by the rise in commodities prices.
Stock In The News
Shares of online media firm Sina (SINA) are seeing a notable pullback after the firm reported first quarter net income of $9.7 million or $0.17 per share, compared to $14.1 million or $0.23 per share in the same period last year.
The firm also forecast second quarter revenues in the range of $85 million to $89 million, falling below analyst estimates of $90 million. The stock is down by 7.6 percent, pulling further off of a seven-month high set late last week.
Ameriprise Financial (AMP) is also moving to the downside after the firm said that it is commencing an offering of $900 million in common stock. Shares of the financial planning firm are down by 8.1 percent amid concerns over share dilution, setting a fresh three-week intraday low earlier in the session.
On the other hand, CB Richard Ellis Group (CBG) is up 13.7 percent following the announcement that it expects second quarter earnings per share in the range of approximately breakeven to $0.07. The estimate is largely in line with Wall Street expectations, which call for earnings of $0.07 per share for the second quarter.
In Focus: Economic Data, Corporate News
On the economic front, traders are digesting a report from the Commerce Department showing that the U.S. trade deficit for the month of April came in modestly wider than in March, as the value of exports fell by more than the value of imports.
The report showed that the trade deficit widened to $29.2 billion in April from a revised $28.5 billion in March. Economists had expected the deficit to widen to $29.0 billion from the $27.6 billion originally reported for the previous month.
Later in the day, trading is likely to be impacted by the Treasury Department's budget for May and the Federal Reserve's Beige Book, which compiles commentary on recent economic activity in the 12 Fed districts. The reports are set to be released at 2:00 p.m. ET.
In other news, the Supreme Court has allowed the sale of Chrysler's assets to Italian automaker Fiat to move forward. In lifting a stay on the sale, the high court rejected a move by a group of plaintiffs, including three Indiana public pension organizations, to block the sale.
Both companies and the White House had warned that further delays by the Supreme Court could have led to Fiat's withdrawal from the deal.
Meanwhile, the House Oversight and Government Reform Committee said they've subpoenaed the Federal Reserve for documents, including e-mails to and from Fed Chairman Ben Bernanke, to explore the genesis of Bank of America's December purchase of Merrill Lynch.
On Thursday, the Committee will host Ken Lewis, former Chief Executive Officer of Bank of America, as part of a growing investigation into whether government officials pressured the bank to withhold details about the deal from investors despite ballooning losses at the brokerage firm.
In overseas trading, stock markets across the Asia-Pacific region ended Wednesday's session notably higher. Japan's benchmark Nikkei 225 Index rose by 2.1 percent, while Hong Kong's Hang Seng closed up by 4.0 percent.
The major European markets also closed moderately higher. The U.K.'s FTSE 100 Index closed up by 0.7 percent, while the French CAC 40 Index and the German DAX Index finished up by 0.6 percent and 1.1 percent, respectively.
In the bond markets, treasuries are showing notable weakness. Subsequently, the yield on the benchmark ten-year note is up to 3.9 percent, a climb of 8.6 basis points on the day.
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