Stocks have moved mostly lower in morning trading on Tuesday, extending the sharp pullback seen over the course of the previous session. The Nasdaq and the S&P 500 have moved to the downside, although the narrower Dow has rebounded from initial weakness.
Currently, the Nasdaq is down 138.75 points or 0.9 percent at 15,274.53 and the S&P 500 is down 21.66 points or 0.5 percent at 4,637.31. Meanwhile, the Dow has recently bounced back and forth across the unchanged line and is currently up 53.66 points or 0.2 percent at 35,704.61.
Concerns about the outlook for monetary policy continue to weigh on the markets, as the Federal Reserve’s two-day meeting gets underway.
With inflation remaining at an elevated rate, the Fed is widely expected to accelerate its timetable for reducing bond purchases.
Many traders expect the Fed to begin raising interest rates shortly after bringing its asset purchase program to a halt.
Potentially adding to concerns about monetary policy, the Labor Department released a report showing producer prices increased by more than expected in the month of November.
The report said the producer price index for final demand advanced by 0.8 percent in November after climbing by 0.6 percent in October. Economists had expected producer prices to rise by 0.5 percent.
With the stronger than expected monthly price growth, the annual rate of producer price growth accelerated to 9.6 percent in November from 8.8 percent in October.
The Labor Department said the year-over-year spike reflected the largest advance since 12-month data were first calculated in November 2010.
“The Fed has already pivoted to prioritizing inflation, so rather than causing any new inflation panic, this report is just another nail in the coffin for the “wait it out” mindset seen as recently as a month ago,” said Will Compernolle, Senior Economist at FHN Financial.
He added, “Supply chain pressures should ease in the next few months as holiday shopping lets up and producers have more time to adjust capacity, but the impacts on producer prices and then to consumer prices will not be immediate.
Meanwhile, the Dow is benefiting from strong gains by Travelers (TRV), Dow Inc. (DOW) and JPMorgan Chase (JPM).
Software stocks are turning in some of the market’s worst performances in morning trading, resulting in a 3 percent nosedive by the Dow Jones U.S. Software Index.
Considerable weakness is also visible among gold stocks, as reflected by the 1.8 percent drop by the NYSE Arca Gold Bugs Index.
The weakness in the gold sector comes amid a decrease by the price of the precious metal, with gold for February delivery falling $13.30 to $1,775 an ounce.
On the other hand, steel stocks have shown a substantial move to the upside, driving the NYSE Arca Steel Index up by 2.5 percent.
ArcelorMittal (MT) has helped lead the sector higher after the steelmaker said it had entered into repurchase agreements with certain holders of its convertible senior notes for a $395 million buyback program.
Banking, oil service and airline stocks are also bucking the downtrend after seeing significant weakness in the previous session.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.7 percent, while Hong Kong’s Hang Seng Index dove by 1.3 percent.
Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is up by 0.4 percent, the French CAC 40 Index is down by 0.3 percent and the German DAX Index is down by 0.6 percent.
In the bond market, treasuries are giving back ground after ending the previous session notably higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.1 basis points at 1.465 percent.
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