Profit Taking Contributes Late-Day Sell-Off On Wall Street

(RTTNews) - Stocks recovered from initial weakness and moved mostly higher over the course of morning trading on Wednesday but came under significant pressure in the latter part of the session. The major averages moved sharply lower in late-day trading, partly offsetting recent strength.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow slumped 475.92 points or 1.3 percent to 37,082.00, the Nasdaq dove 225.28 points or 1.5 percent to 14,777.93 and the S&P 500 tumbled 70.02 points or 1.5 percent to 4,698.35.

The late-day sell-off on Wall Street was largely attributed to profit taking, with traders cashing in on the strong upward move seen in recent sessions.

The Dow and the Nasdaq closed higher for the ninth consecutive session on Tuesday, as traders continued to express optimism about the outlook for interest rates.

The upward trend lifted the Dow to new record highs, while the Nasdaq and the S&P 500 reached their best levels in nearly two years.

A steep drop by shares of FedEx (FDX) also weighed on the markets, with the delivery giant plunging by 12.1 percent on the day.

The nosedive by FedEx came after the company reported weaker than expected fiscal second quarter results and lowered its full-year revenue guidance.

Meanwhile, traders shrugged off a Conference Board showing a much bigger than expected improvement in U.S. consumer confidence, which had contributed to the rebound in early trading.

The Conference Board said its consumer confidence index jumped to 110.7 in December from a downwardly revised 101.0 in November.

Economists had expected the consumer confidence index to rise to 103.4 from the 102.0 originally reported for the previous month.

A separate report released by the National Association of Realtors showed an unexpected rebound in U.S. existing home sales in the month of November.

Sector News

Biotechnology stocks moved sharply lower over the course of the session, with the NYSE Arca Biotechnology Index plunging by 3.4 percent after ending Tuesday's trading at a five-month closing high.

Netherlands-based Argenx (ARGX) led the sector lower, plummeting by 25.1 percent after reporting disappointing results from a late-stage trial of its therapy for an autoimmune condition that causes skin blistering.

Substantial weakness also emerged among semiconductor stocks, as reflected by the 2.9 percent slump by the Philadelphia Semiconductor Index. The index reached a record closing high on Tuesday.

Transportation stocks also saw considerable weakness amid the steep drop by the FedEx, dragging the Dow Jones Transportation Average down by 2.4 percent.

Banking, networking and gold stocks also came under pressure as the day progressed, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. Japan's Nikkei 225 Index jumped by 1.4 percent and Hong Kong's Hang Seng Index climbed by 0.7 percent, although China's Shanghai Composite Index bucked the uptrend and slumped by 1.0 percent.

Meanwhile, the major European markets turned in a mixed performance. While the German DAX Index edged down by 0.1, the French CAC 40 Index crept up by 0.1 percent and the U.K.'s FTSE 100 Index jumped by 1.0 percent.

In the bond market, treasuries gave back ground after seeing initial strength but moved back to the upside in afternoon trading. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.5 basis points to 3.877 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to a slew of U.S. economic data, including reports on weekly jobless claims, Philadelphia-area manufacturing activity and leading U.S. economic indicators.