Stocks Seeing Modest Weakness Following Yesterday's Rally - U.S. Commentary

(RTTNews) - Stocks have moved moderately lower in early trading on Wednesday, partly offsetting the rally seen in the previous session. The major averages have all moved to the downside, although selling pressure has remained somewhat subdued.

In recent trading, the major averages have climbed off their worst levels, but they currently remain in the red. The Dow is down 68.97 points or 0.4 percent at 16,796.11, the Nasdaq is down 11.72 points or 0.3 percent at 4,677.87 and the S&P 500 is down 6.13 points or 0.3 percent at 1,972.22.

The early weakness on Wall Street is partly due to profit taking, as traders cash in on the upward trend seen over the past few weeks.

The strong gains posted in the previous session more than offset the weakness seen on Monday, lifting the major averages to their best closing levels in almost two months.

Traders are also reacting to a report from payroll processor ADP showing much stronger than expected private sector job growth in the month of February.

ADP said private sector employment jumped by 214,000 jobs in February following an increase of 193,000 jobs in January. Economists had expected employment to rise by about 185,000 jobs.

While the report paints a positive picture of the job market ahead of Friday's more closely watched Labor Department report, the data has also led to renewed concerns about the outlook for interest rates.

The Federal Reserve may shed some more light on the interest rate outlook later in the day with the release of its Beige Book.

The Beige Book, a collection of anecdotal reports from the twelve Fed districts, is used by the central bank to make upcoming monetary policy decisions.

A decrease by the price of crude oil is also weighing on the markets, with crude for April delivery sliding $0.50 to $33.90 a barrel.

The pullback by the price of crude oil comes after it advanced by $0.65 in the previous session to a nearly two-month closing high of $34.40 a barrel.

Chemical stocks have shown a significant move to the downside, dragging the Dow Jones Chemicals Index down by 1.6 percent. The drop by the index comes after it ended Tuesday's trading at its best closing level in nearly two months.

Oil service and utilities stocks have also come under pressure in early trading, while notable strength is visible among steel and gold stocks.

In overseas trading, stock markets across the Asia-Pacific moved notably higher following the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 4.1 percent, while Hong Kong's Hang Seng Index shot up by 3.1 percent.

Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index is just above the unchanged line, the French CAC 40 Index is down by 0.3 percent and the U.K.'s FTSE 100 Index is down by 0.7 percent.

In the bond market, treasuries are seeing modest weakness, extending the steep drop seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.1 basis points at 1.855 percent.