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U.S. Stocks Finish Lackluster Session Narrowly Mixed

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April 16 2024 4:33PM

Stocks showed a lack of direction over the course of the trading day on Tuesday, as traders took a breather following the sell-off seen over the two previous sessions. The major averages bounced back and forth across the unchanged line before eventually closing narrowly mixed.

While the Dow (DOWI:DJI) rose 63.86 points or 0.2 percent to 37,798.97, snapping a six-session losing streak, the Nasdaq (NASDAQI:COMP) edged down 19.77 points or 0.1 percent to 15,865.25 and the S&P 500 (SPI:SP500) slipped 10.41 points or 0.2 percent to 5,051.41.

The modest gain by the Dow came amid a surge by shares of UnitedHealth (NYSE:UNH), with the health insurance giant spiking by 5.2 percent.

UnitedHealth rallied after reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, a 2.1 percent slump by shares of Johnson & Johnson (NYSE:JNJ) limited the upside for the blue chip index even though the healthcare giant reported first quarter earnings that beat expectations.

The lack of direction shown by the broader markets came as traders weighed the idea of picking up stocks at relatively reduced levels against concerns about the outlook for interest rates.

The yield on the benchmark ten-year note reached its highest intraday levels in almost six months after the Federal Reserve released a report showing a continued increase in U.S. industrial production in the month of March.

The Fed said industrial production climbed by 0.4 percent in March, matching the upwardly revised advance in February as well as economist estimates.

Adding to the rate worries, Fed Chair Jerome Powell indicated in afternoon remarks that rates are likely to remain higher for longer amid a “lack of progress” toward reaching the central bank’s inflation goal.

“Recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2 percent inflation goal,” Powell said during a moderated discussion with Bank of Canada Governor Tiff Macklem.

Fed officials, including Powell, have repeatedly stated they need “greater confidence” inflation is slowing before they consider cutting interest rates.

“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said. “That said, we think policy is well positioned to handle the risks that we face.”

Sector News

Banking stocks considerable weakness on the day, with the KBW Bank Index falling by 1.6 percent to its lowest closing level in well over a month.

Bank of America (NYSE:BAC) helped lead the sector lower, tumbling by 3.5 percent after reporting first quarter earnings that beat analyst estimates but decreased year-over-year.

Interest rate-sensitive utilities, telecom, housing and commercial real estate stocks also showed significant moves to the downside.

Gold, airline and oil service stocks also saw notable weakness, while strength was visible among computer hardware and semiconductor stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Tuesday. Japan’s Nikkei 225 Index dove by 1.9 percent, while Hong Kong’s Hang Seng Index plummeted by 2.1 percent.

The major European markets also showed significant moves to the downside on the day. While the U.K.’s FTSE 100 Index tumbled by 1.8 percent, the German DAX Index and the French CAC 40 Index both slumped by 1.4 percent.

In the bond market, treasuries saw continued weakness, extending the sell-off seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.1 basis points to 4.659 percent.

Looking Ahead

Trading activity may be somewhat subdued on Wednesday amid a relatively quiet day on the U.S. economic front, although the Fed’s Beige Book may attract some attention later in the day.