U.S. Stocks Close Little Changed Following Choppy Trading Session

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(RTTNews) – Following the 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 bouncing back and forth across the unchanged line.

Eventually, the major averages ended the day little changed. While the Nasdaq edged down 32.70 points or 0.2 percent to 14,644.95, the Dow inched up 44.44 points or 0.1 percent to 34,933.23 and the S&P 500 crept up 5.09 points or 0.1 percent to 4,374.30.

Stocks moved to the upside early in the session amid a positive reaction to Federal Reserve Chair Jerome Powell’s prepared remarks before the House Financial Services Committee.

Powell reiterated the belief that “substantial further progress” towards the Fed’s goals of maximum employment and price stability is “still a ways off,” suggesting the central bank is not likely to begin tightening monetary policy anytime soon.

The Fed chief also once again stressed that the Fed will provide “advance notice” before announcing any changes to its asset purchase program.

Powell acknowledged that inflation has increased notably and will likely remain elevated in coming months but predicted inflation would moderate as the effects of the production bottlenecks unwind.

Buying interest waned shortly after the start of trading, however, as the sentiment from Powell was little changed from the Fed’s recent assessments.

Powell’s comments about inflation came as the Labor Department released a report showing producer prices jumped by much more than expected in the month of June.

The Labor Department said its producer price index for final demand surged up by 1.0 percent in June after climbing by 0.8 percent in May. Economists had expected producer prices to rise by 0.6 percent.

The report also showed the annual rate of producer price growth accelerated to 7.3 percent in June from 6.6 percent in May, reaching the highest level since 12-month data were first calculated in November of 2010.

Later in the day, the Federal Reserve released its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.

The Beige Book noted the U.S. economy strengthened further from late May to early July, with the pace of growth described as moderate to robust.

Looking ahead, the Beige Book said the outlook for demand continued to improve but noted many contacts expressed uncertainty or pessimism over the easing of supply constraints.

On the earnings front, shares of Citigroup (C) moved modestly lower over the course of the session even though the financial giant reported better than expected second quarter earnings.

Delta Air Lines (DAL) also moved to the downside despite reporting a narrower than expected second quarter loss on revenues that exceeded analyst estimates.

Meanwhile, shares of Bank of America (BAC) came under pressure after the financial giant reported second quarter earnings that beat expectations but on weaker than expected revenues.

Sector News

Most of the major sectors ended the day showing only modest moves, although energy stocks saw substantial weakness amid a steep drop by the price of crude oil.

Crude for August delivery plunged $2.12 to $73.13 a barrel after a report from Reuters said Saudi Arabia and the United Arab Emirates have reached a compromise over OPEC+ policy.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 3.7 percent, the NYSE Arca Oil Index tumbled by 3.3 percent and the NYSE Arca Natural Gas Index slumped by 2.5 percent.

Biotechnology and brokerage stocks also saw notable weakness on the day, while some strength was visible among tobacco and gold stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index tumbled by 1.1 percent.

Meanwhile, European stocks showed a modest move to the downside on the day. While the U.K.’s FTSE 100 Index slid by 0.5 percent, the German DAX Index and the French CAC 40 Index both closed just below the unchanged line.

In the bond market, treasuries rebounded after coming under pressure over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.9 basis points to 1.356 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to the latest batch of economic news, including reports on weekly jobless claims, regional manufacturing activity and industrial production.

Powell is also scheduled to testify before the Senate Banking Committee, where he is likely to reiterate his prepared remarks.

Morgan Stanley (MS), UnitedHealth (UNH) and Cintas (CTAS) are also among the companies due to report their quarterly results before the start of trading on Thursday.

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