Major Averages Clinging To Modest Gains In Morning Trading - U.S. Commentary

(RTTNews) - Stocks moved mostly higher early in the session but have turned in a relatively lackluster performance since then. The major averages have pulled back off their highs of the session but are currently holding on to modest gains.

After ending the previous session on opposite sides of the unchanged line, the Dow is up 38.26 points or 0.1 percent at 26,631.17, the Nasdaq is up 25.39 points or 0.3 percent at 8,120.78 and the S&P 500 is up 2.25 points or 0.1 percent at 2,948.08.

A positive reaction to earnings news from Apple (AAPL) contributed to the initial strength on Wall Street, with the tech giant jumping by more than 6 percent.

The advance by Apple comes after the company reported fiscal second quarter results that beat analyst estimates on both the top and bottom lines and provided upbeat guidance.

Positive sentiment was also generated in reaction to a report from payroll processor ADP showing much stronger than expected private sector job growth in the month of April.

ADP said private sector employment surged up by 275,000 jobs in April after climbing by an upwardly revised 151,000 jobs in March.

Economists had expected employment to increase by about 180,000 jobs compared to the addition of 129,000 jobs originally reported for the previous month.

"The economic soft patch at the start of the year has not materially impacted hiring," said Mark Zandi, chief economist of Moody's Analytics. "April's job gains overstate the economy's strength, but they make the case that expansion continues on."

However, buying interest was partly offset by the release of a separate report from the Institute for Supply Management showing the slowest pace of growth in manufacturing activity in over two years.

The ISM said its purchasing managers index slid to 52.8 in April after unexpectedly climbing to 55.3 in March, hitting its lowest level since October of 2016.

A reading above 50 still indicates growth in the manufacturing sector, although economists had expected the index to show a much more modest decrease to 55.0.

Traders also seemed reluctant to make more significant moves ahead of the Federal Reserve's monetary policy announcement this afternoon.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to keep a close eye on the accompanying statement and Fed Chairman Jerome Powell's subsequent press conference.

Despite the modest strength being shown by the broader markets, gold stocks have shown a significant move to the downside in morning trading.

The NYSE Arca Gold Bugs Index is sliding by 1.5 percent, as the price of gold for June delivery is slipping $0.50 to $1,285.20 an ounce.

Natural gas, transportation, and telecom stocks are also seeing notable weakness on the day, while some strength is visible among computer hardware stocks on the heels of Apple's earnings.

In overseas trading, most stock markets across the Asia-Pacific region were closed on Wednesday, although Australian stocks moved notably higher. The S&P/ASX 200 Index advanced by 0.8 percent.

Meanwhile, U.K. stocks have moved to the downside, while the other major European markets are closed on the day. The U.K.'s FTSE 100 Index has fallen by 0.4 percent.

In the bond market, treasuries have moved higher in reaction to the disappointing manufacturing data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.2 basis points at 2.477 percent.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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