U.S. Stocks Move Mostly Lower As Fed Announcement Looms
With traders awaiting the Federal Reserve’s monetary policy announcement, stocks have moved mostly lower during trading on Wednesday. The Nasdaq has shown a particularly steep drop amid weakness among technology stocks.
In recent trading, the major averages have fallen to new lows for the session. The Nasdaq is down 184.74 points or 1.5 percent at 12,379.02, while the S&P 500 is down 19.95 points or 0.5 percent at 4,155.53 and the Dow is down 21.80 points or 0.1 percent to 33,106.99.
The weakness on Wall Street comes as traders brace for the Fed’s latest monetary policy decision, with the central bank widely expected to raise interest rates by 50 basis points.
Traders are likely to pay close attention to the accompanying statement for clues about how aggressively the central bank plans to tighten monetary policy going forward.
Negative sentiment may also have been generated by a report from the Institute for Supply Management showing an unexpected slowdown in the pace of growth in U.S. service sector activity.
The ISM said its Services PMI fell to 57.1 in April from 58.3 in March, although a reading above 50 still indicates growth in the sector. The decrease surprised economists, who had expected the index to inch up to 58.5.
Anthony Nieves, Chair of the ISM Services Business Survey Committee, said the pullback by the index was mostly due to the restricted labor pool and the slowing of new orders growth.
A separate report released by payroll processor ADP showed U.S. private sector job growth slowed by more than expected in the month of April.
ADP said private sector employment increased by 247,000 jobs in April after jumping by an upwardly revised 479,000 jobs in March.
Economists had expected private sector employment to surge by 395,000 jobs compared to the addition of 455,000 jobs originally reported for the previous month.
The Commerce Department also released a report showing the U.S. trade deficit widened to a new record in the month of March.
The report showed the trade deficit widened to $109.8 billion in March from a revised $89.8 billion in February. Economists had expected the deficit to widen to $107.0 billion from the $89.2 billion originally reported for the previous month.
Networking stocks have shown a substantial move to the downside on the day, dragging the NYSE Arca Networking Index down by 2.3 percent.
Significant weakness is also visible among airline stocks, as reflected by the 2 percent slump by the NYSE Arca Airline Index.
Biotechnology stocks are also seeing considerable weakness on the day, resulting in a 1.8 percent drop by the NYSE Arca Biotechnology Index.
Retail, steel and gold stocks have also shown notable moves to the downside, while oil and utilities stocks have moved higher.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday, with markets in Japan and China still closed holidays. Hong Kong’s Hang Seng Index tumbled by 1.1 percent, while Australia’s S&P/ASX 200 Index edged down by 0.2 percent.
The major European markets have also moved to the downside on the day. While the German DAX Index is down by 0.1 percent, the U.K.’s FTSE 100 Index is down by 0.6 percent and the French CAC 40 Index is down by 0.9 percent.
In the bond market, treasuries have moved lower as traders await the Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.9 basis points at 2.989 percent.
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