Stocks Nearly Flat After Early Rally Fades - U.S. Commentary

(RTTNews) - After failing to sustain an initial upward move, stocks are turning in a lackluster performance in mid-day trading on Wednesday. The major averages have pulled back well off their highs for the session and are now lingering near the unchanged line.

Currently, the major averages are nearly flat, showing moves off less than a tenth of a percent each. While the Dow is down 1.10 points at 16,491.58, the Nasdaq is up 2.09 points at 4,814.02 and the S&P 500 is up 0.25 points at 1,969.66.

The initial upward move on Wall Street partly reflected a positive reaction to continued strength in the overseas markets.

Stocks in the Asia-Pacific region saw considerable strength following yesterday's rally on Wall Street, with Japan's Nikkei 225 Index soaring by 7.7 percent.

China's Shanghai Composite Index also jumped by 2.3 percent, adding to the 2.9 percent gain posted in the previous session.

Analysts suggested the continued strength among Chinese stocks was partly due to optimism that the government will take additional steps to support the economy.

Buying interest waned not long after the start of trading, however, as traders seemed reluctant to continue picking up stocks amid a lack of major U.S. economic data.

Traders may also be taking a breather following the substantial volatility seen on Wall Street over the past few weeks.

Peter Cardillo, chief market economist at Rockwell Global Capital, said the persistent high volatility coupled with wider gyrations is likely to diminish investors' appetite for equities in the short run.

"On the other hand, from a technical perspective the S&P held the lower end of what could be considered a lower trading range as the markets await September's two big events, the Fed and quarterly options expiration," Cardillo said.

He added, "While the above scenario is not likely to change, we reiterate our view that the correction has found a bottom."

Among individual stocks, shares of Dave & Buster's (PLAY) have moved sharply higher after the restaurant and arcade chain reported better than expected second quarter results and provided upbeat guidance.

FuelCell Energy (FCEL) is also turning in a strong performance on the day after reporting third quarter revenues that beat estimates despite decreasing year-over-year.

Meanwhile, shares of Pacific Sunwear (PSUN) have come under pressure after the apparel retailer reported a wider than expected second quarter loss and provided disappointing guidance.

Sector News

Most of the major sectors are showing only modest moves in mid-day trading, contributing to the lack of direction being shown by the broader markets.

Gold stocks have shown a substantial move to the downside, however, with the NYSE Arca Gold Bugs Index tumbling by 2.2 percent.

The weakness among gold stocks comes amid a notable decrease by the price of the precious metal, as gold for December delivery is sliding $13.50 to $1,107.50 an ounce.

Biotechnology and oil service stocks are also see some weakness on the day, while strength remains visible among internet and computer hardware stocks.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved sharply higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 7.7 percent, while Hong Kong's Hang Seng Index leapt by 4.1 percent.

The major European markets also finished the day higher but well off their best levels. While the German DAX Index rose by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both jumped by 1.4 percent.

In the bond market, treasuries have climbed off their worst levels but continue to see moderate weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, up by 3.3 basis points at 2.227 percent.