After initially moving to the upside, stocks have shown a lack of direction over the course of morning trading on Wednesday. The major averages have spent the morning bouncing back and forth across the unchanged line.
Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 15.78 points or 0.2 percent at 9,911.65, the Dow is down 91.90 points or 0.4 percent at 26,198.08 and the S&P 500 is down 5.80 points or 0.2 percent at 3,118.94.
The choppy trading on Wall Street comes as traders pause to digest the volatility seen in the markets over the past few weeks.
Stocks showed a strong move to the upside earlier this month, with the tech-heavy Nasdaq hitting a new record high and the Dow and the S&P 500 reaching their best levels in over three months.
Profit taking contributed to a sharp pullback by the markets last week, although the upward move seen over the three previous sessions largely offset the drop.
Traders are also weighing recent data pointing to a quick economic recovery against reports showing a spike in new coronavirus cases and hospitalizations in a number of southern states.
In congressional testimony on Tuesday, Federal Reserve Chair Jerome Powell warned that there continues to be significant uncertainty about the economic outlook.
“Much of that economic uncertainty comes from uncertainty about the path of the disease and the effects of measures to contain it,” Powell said. “Until the public is confident that the disease is contained, a full recovery is unlikely.”
Around noon, Federal Reserve Chair Jerome Powell is scheduled to begin testifying before the House Financial Services Committee.
Powell’s prepared remarks are likely to mirror those he delivered before the Senate Banking Committee, although traders will still keep an eye on the question-and-answer portion of his testimony.
On the U.S. economic front, the Commerce Department released a report showing a notable rebound in new residential construction in May, although housing starts still came in well below economist estimates.
The report said housing starts jumped by 4.3 percent to an annual rate of 974,000 in May after plummeting by 26.4 percent to a revised rate of 934,000 in April.
Economists had expected housing starts to soar by 22.9 percent to a rate of 1.095 million from the 891,000 originally reported for the previous month.
Meanwhile, the Commerce Department said building permits spiked by 14.4 percent to an annual rate of 1.220 million in May after plunging by 21.4 percent to a revised rate of 1.066 million in April.
Building permits, an indicator of future housing demand, had been expected to surge up by 14.3 percent to a rate of 1.228 million from the 1.074 million originally reported for the previous month.
Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.
Energy stocks have shown a significant move to the downside, however, with a decrease by the price of crude oil weighing the sector. Crude for July delivery is currently slipping $0.30 to $38.08 a barrel.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 3.6 percent, the NYSE Arca Oil Index is down by 1.7 percent and the NYSE Arca Natural Gas Index is down by 1.3 percent.
Steel and telecom stocks are also giving back ground after posting strong gains on Tuesday, while gold stocks have moved notably higher despite a decrease by the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, although Japan’s Nikkei 225 Index bucked the uptrend and slid by 0.6 percent. China’s Shanghai Composite Index inched up by 0.1 percent, while Hong Kong’s Hang Seng Index climbed by 0.6 percent.
Meanwhile, the major European markets have turned mixed on the day. While the U.K.’s FTSE 100 Index has dipped just below the unchanged line, the German DAX Index is up by 0.1 percent and the French CAC 40 Index is up by 0.4 percent.
In the bond market, treasuries are regaining ground following the notable drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 0.736 percent.
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