U.S. Stocks Showing A Lack Of Direction Amid Uncertainty About Stimulus

After an initial move to the upside, stocks have shown a lack of direction over the course of morning trading on Monday. The major averages have pulled back off their early highs and spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 49.67 points or 0.2 percent at 28,556.65, the Nasdaq is down 8.12 points or 0.1 percent at 11,663.43 and the S&P 500 is down 8.79 points or 0.3 percent at 3,475.02.

The choppy trading on Wall Street comes amid continued uncertainty about whether lawmakers in Washington will be able to reach an agreement on a new stimulus bill.

In a post on Twitter, House Speaker Nancy Pelosi’s deputy chief of staff Drew Hammill revealed that the Democratic leader spoke with Treasury Secretary Steven Mnuchin for just over an hour on Saturday.

“While there was some encouraging news on testing, there remains work to do to ensure there is a comprehensive testing plan that includes contact tracing and additional measures to address the virus’ disproportionate impact on communities of color,” Hammill tweeted.

Hammill said that there remains an array of additional differences that must be addressed in a comprehensive manner in the next 48 hours.

“Decisions must be made by the White House in order to demonstrate that the Administration is serious about reaching a bipartisan agreement that provides for Americans with the greatest needs during the pandemic,” Hammill said.

On the U.S. economic front, homebuilder confidence climbed to another new record high in the month of October, according to a report released by the National Association of Home Builders.

The report said the NAHB/Wells Fargo Housing Market Index rose to 85 in October from 83 in September. Economists had expected the index to come in unchanged.

“Traffic remains high and record-low interest rates are keeping demand strong as the concept of ‘home’ has taken on renewed importance for work, study and other purposes in the Covid era,” said NAHB Chairman Chuck Fowke.

He added, “However, it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber and other key building materials are lengthening construction times.”

Despite the lack of direction being shown by the broader markets, airline stocks have moved sharply higher on the day. Reflecting the strength in the sector, the NYSE Arca Airline Index has soared by 4 percent.

Considerable strength is also visible among oil service stocks, as reflected by the 3.5 percent jump by the Philadelphia Oil Service Index.

Halliburton (HAL) has helped to leader the oil service sector higher after the industry giant reported better than expected quarterly results.

Steel, computer hardware and networking stocks are also seeing notable strength on the day, while most of the other major sectors are showing more modest moves.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index jumped by 1.1 percent, while China’s Shanghai Composite Index fell by 0.7 percent.

The major European markets have also turned mixed on the day. While the French CAC 40 Index is up by 0.4 percent, the German DAX Index is down by 0.1 percent and the U.K.’s FTSE 100 Index is down by 0.2 percent.

In the bond market, treasuries have moved to the downside, extending the modest drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.7 basis points at 0.771 percent.

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