U.S. Stocks Nearly Unchanged In Mid-Day Trading

Extending the lackluster performance seen in the previous session, stocks have shown a lack of direction over the course of the trading day on Wednesday. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are nearly flat. While the S&P 500 is up 0.38 points or less than a tenth of a percent at 4,074.32, the Dow is down 30.52 points or 0.1 percent at 33,399.72 and the S&P 500 is down 8.07 points or 0.1 percent at 13,690.31.

The choppy trading on Wall Street comes as traders remain reluctant to make significant moves as the wait for more clarity about the near-term outlook for the markets.

Strong economic data has helped lift stocks to record highs in recent sessions, but traders may be worried the markets are becoming overbought.

In his annual letter to shareholders, JPMorgan Chase chairman and CEO Jamie Dimon acknowledged valuations are “quite high” but noted a multi-year booming economy could justify current prices.

“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon wrote. “This boom could easily run into 2023 because all the spending could extend well into 2023.

He added, “Equity markets look ahead, and they may very well be pricing in not only a booming economy but also the technical factor that lots of the excess liquidity will find its way into stocks.”

Traders may also be looking ahead to the release of the minutes of the Federal Reserve’s latest monetary policy meeting, which could shed additional light on the outlook for interest rates.

Estimates provided after the meeting show Fed officials expect rates to remain at near-zero levels through 2023, but the fed funds futures market is predicting a rate hike in December 2022 following recent upbeat economic data.

On the U.S. economic front, the Commerce Department released a report showing the U.S. trade deficit widened more than expected in the month of February.

The Commerce Department said the trade deficit widened to $71.1 billion in February from a revised $67.8 billion in January.

Economists had expected the deficit to widen to $70.5 billion from the $68.2 billion originally reported for the previous month.

With the bigger than expected increase in February, the size of the U.S. trade deficit reached a new record high.

The wider deficit came as the value of exports tumbled by 2.6 percent to $187.3 billion, while the value of imports slid by 0.7 percent to $258.3 billion.

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Biotechnology stocks have shown a significant move to the downside, however, with the NYSE Arca Biotechnology Index slumping by 2 percent.

Considerable weakness has also emerged among chemical stocks, as reflected by the 1.6 percent drop by the S&P Chemical Sector Index.

Airline, gold and housing stocks have also moved notably lower on the day, while some strength is visible among retail stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.

The major European markets also ended the day mixed. While the U.K.’s FTSE 100 Index advanced by 0.9 percent, the French CAC 40 Index closed just below the unchanged line and the German DAX Index dipped by 0.2 percent.

In the bond market, treasuries have moved modestly higher over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.7 basis points at 1.639 percent.

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