U.S. Stocks Close Higher Following Volatile Session


Following the substantial pullback seen in the previous session, stocks showed a lack of direction over the course of the trading day on Wednesday. The major averages spent the day swinging back and forth across the unchanged line.

The major averages moved to the upside going into the close, managing to end the day in positive territory. While the Nasdaq climbed 86.10 points or 0.7 percent to 11,719.68, the S&P 500 rose 13.32 points or 0.3 percent to 3,946.01 and the Dow inched up 30.12 points or 0.1 percent to 31,135.09.

The choppy trading on the day came as traders seemed reluctant to make significant moves following recent volatility, which saw the major averages nearly wipe out their recent recovery rally with their worst day since June 2020.

Concerns about the outlook for interest rates continue to weigh on the markets after Tuesday’s hotter-than-expected consumer price inflation report.

The data has led to worries the Federal Reserve could raise interest by 100 basis points after next week’s monetary policy meeting.

CME Group’s FedWatch Tool is currently indicating a 72.0 percent chance of a 75 basis point rate hike and a 28.0 percent chance of a 100 basis point rate hike.

Partly offsetting the inflation worries, the Labor Department released a separate report this morning showing a modest decrease in U.S. producer prices in the month of August.

The Labor Department said its producer price index for final demand edged down by 0.1 percent in August after falling by a revised 0.4 percent in July.

Economists had expected producer prices to dip by 0.1 percent compared to the 0.5 percent drop originally reported for the previous month.

The report also showed the annual rate of growth in producer prices slowed to 8.7 percent in August from 9.8 percent in July, roughly in line with estimates.

Traders may also have decided to stick to the sidelines ahead of the release of a slew of U.S. economic data on Thursday, including reports on weekly jobless claims, retail sales and industrial production.

Sector News

While most of the major sectors ended the day showing only modest moves, energy stocks saw significant strength amid a notable increase by the price of crude oil. Crude for October delivery jumped $1.17 to $88.48 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged by 3.3 percent and the NYSE Arca Oil Index shot up by 2.4 percent.

The NYSE Arca Natural Gas Index also spiked by 3.2 percent, as the price of natural gas for October delivery soared $0.83 or 10.0 percent to $9.114 per million BTUs.

Semiconductor and networking stocks also saw considerable strength, while steel stocks saw substantial weakness, dragging the NYSE Arca Steel Index down by 4.3 percent.

Interest rate-sensitive commercial real estate and housing stocks also showed notable moves to the downside on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Wednesday. Japan’s Nikkei 225 Index tumbled by 2.8 percent, while China’s Shanghai Composite Index slid by 0.8 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index fell by 0.4 percent, the German DAX Index slumped by 1.2 percent and the U.K.’s FTSE 100 Index dove by 1.5 percent.

In the bond market, treasuries showed a lack of direction over the course of the session after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day down just 1 basis point at 3.412 percent.

Looking Ahead

The hefty batch of U.S. economic data is likely to attract attention on Thursday, as traders comb through the reports looking for additional clues about the outlook for interest rates.

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