U.S. Stocks Give Back Ground Following Early Rally
(RTTNews) - After moving sharply higher early in the session, stocks have given back some ground over the course of the trading day on Wednesday. The major averages have pulled back well off their highs, with the tech-heavy Nasdaq dipping into negative territory.
Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 61.31 points or 0.6 percent at 10,427.27, the Dow is up 58.75 points or 0.2 percent at 26,701.34 and the S&P 500 is up 7.06 points or 0.2 percent at 3,204.58.
The early strength on Wall Street came as upbeat news on the coronavirus vaccine front helped traders shrug off news of a record single-day spike in new Covid-19 cases in the U.S.
Biotech firm Moderna (MRNA) said its experimental vaccine for Covid-19 was safe and produced strong immune responses in all 45 patients in an ongoing early-stage human trial.
An interim analysis of the open-label Phase 1 study of the vaccine candidate was published in the New England Journal of Medicine.
The latest news follows other recent positive developments on the coronavirus treatment and vaccine fronts, which have generated optimism the economic threat posed by the pandemic could be addressed in the relatively near future.
Upbeat earnings news from Goldman Sachs (GS) added to the positive sentiment, with the financial giant reporting much stronger than expected second quarter results.
Goldman Sachs reported earnings of $6.26 per share on revenues of $13.3 billion compared to analyst estimates for earnings of $3.78 per share on revenues of $9.8 billion. The company benefited from strong results in its trading and investment banking divisions.
Traders also reacted positively to a report from the Federal Reserve showing U.S. industrial production spiked by even more than anticipated in the month of June.
The report said industrial production soared by 5.4 percent in June after jumping by 1.4 percent in May. Economists had expected production to surge up by 4.3 percent.
Despite the substantial increase, the Fed noted industrial production remained 10.9 percent below its pre-pandemic February level.
The subsequent pullback by the markets may partly reflect Secretary of State Mike Pompeo's announcement of plans to impose visa restrictions on certain employees of Chinese tech companies like Huawei.
The announcement by Pompeo is likely to add to rising tensions between the U.S. and China, which have recently surged over China's interference with Hong Kong's autonomy.
The notable downturn by the Nasdaq comes amid steep drops by big-name tech companies like Amazon (AMZN) and Netflix (NFLX), which are pulling back further off their recent record highs.
Despite the pullback by the broader market, substantial strength remains visible among airline stocks, as reflected by the 4.6 percent spike by the NYSE Arca Airline Index.
Oil service stocks also continue to see considerable strength in mid-day trading, with the Philadelphia Oil Service Index jumping by 2.6 percent.
The continued strength in the oil service sector comes as the price of crude oil for August is climbing $0.42 to $40.71 a barrel.
The upbeat earnings news from Goldman Sachs is also contributing to continued strength among brokerage stocks, resulting in a 1.7 percent gain by the NYSE Arca Broker/Dealer Index.
Tobacco, transportation and banking stocks also continue to post strong gains, while semiconductor and retail stocks have moved to the downside.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, although China's Shanghai Composite Index bucked the uptrend and tumbled by 1.6 percent. Japan's Nikkei 225 Index and Australia's S&P/ASX 200 Index jumped by 1.6 percent and 1.9 percent, respectively.
The major European markets also showed strong moves to the upside on the day. While the French CAC 40 Index soared by 2 percent, the U.K.'s FTSE 100 Index and the German DAX Index both surged up by 1.8 percent.
In the bond market, treasuries have climbed back near the unchanged line after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 0.622 percent.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.