U.S. Stocks Turning In Lackluster Performance After Initial Rebound

After an initial move to the upside, stocks have fluctuated over the course of morning trading on Wednesday. The major averages have been bouncing back and forth across the unchanged line after ending yesterday’s trading sharply lower.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 39.38 points or 0.3 percent at 13,098.84, the S&P 500 is down 6.71 points or 0.2 percent at 4,222.74 and the Dow is down 114.26 points or 0.4 percent at 32,888.12.

Bargain hunting contributed to the initial strength on Wall Street, as some traders picked up stocks at reduced levels after the sell-off seen on Tuesday dragged the major averages down to their lowest closing levels in four months.

Buying interest waned shortly after the start of trading, however, as concerns about the outlook for interest rates continue to hang over the markets.

Traders have largely shrugged off a report from payroll processor ADP showing private sector job growth slowed by much more than expected in the month of September.

ADP said private sector employment rose by 89,000 jobs in September after climbing by an upwardly revised 180,000 jobs in August.

Economists had expected private sector employment to advance by 153,000 jobs compared to the addition of 177,000 jobs originally reported for the previous month.

The increase in September reflected the slowest pace of job growth since January 2021, when private employers shed jobs.

While Jeffrey Roach, Chief Economist for LPL Financial, said a cooling labor market will take pressure off the Federal Reserve, he urged traders to proceed with caution ahead of the Labor Department’s more closely watched report on Friday.

Economists expect employment to increase by 170,000 jobs in September after climbing by 187,000 jobs in August, while the unemployment rate is expected to edge down to 3.7 percent from 3.8 percent.

The Institute for Supply Management released a separate report this morning showing a modest slowdown in the pace of growth in U.S. service sector activity in the month of September.

The ISM said its services PMI edged down to 53.6 in September from 54.5 in August, although a reading above 50 still indicates growth. The modest decrease matched economist estimates.

Sector News

Energy stocks are turning in some of the worst performances on the day, with a steep drop by the price of crude oil weighing on the sector.

With crude for November delivery plunging $2.78 to $86.45 a barrel, the Philadelphia Oil Service Index is down by 4.0 percent and the NYSE Arca Oil Index is down by 3.9 percent.

Networking stocks are also extending the steep drop seen on Tuesday, dragging the NYSE Arca Networking Index down by 1.5 percent to its lowest intraday level in almost a year.

Natural gas, steel and gold stocks are also seeing notable weakness, while some strength is visible among software stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Wednesday. Japan’s Nikkei 225 Index plummeted by 2.3 percent, while Hong Kong’s Hang Seng Index slid by 0.8 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.2 percent, the German DAX Index is up by 0.3 percent and the French CAC 40 Index is up by 0.5 percent.

In the bond market, treasuries have pulled back off their early high but continue to see modest strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down 2.1 basis points at 4.781 percent.

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