U.S. Stocks Regain Ground After Early Slump But Remain Mostly Lower

(RTTNews) - Stocks moved sharply lower in early trading on Wednesday, adding to the losses posted in the previous session. The major averages have climbed well off their worst levels of the day since then but are currently in negative territory.

The tech-heavy Nasdaq is underperforming its counterparts, slumping 128.71 points or 0.9 percent to 14,815.64. The S&P 500 is down 24.05 points or 0.5 percent at 4,741.93, while the narrower Dow is posting a more modest loss, down 25.66 points or 0.1 percent at 37,335.46.

The early weakness on Wall Street partly reflected ongoing uncertainty about the outlook for interest rates amid recent concerns the Federal Reserve won't lower rates as early as previously anticipated.

Adding to worries the Fed will hold off on cutting rates, the Commerce Department released a report this morning showing U.S. retail sales increased by more than expected in the month of December.

The report said retail sales climbed by 0.6 percent in December after rising by 0.3 percent in November. Economists had expected retail sales to advance by 0.4 percent.

Excluding a jump in sales by motor vehicle and parts dealers, retail sales rose by 0.4 percent in December after inching up by 0.2 percent in November. Ex-auto sales were expected to edge up by another 0.2 percent.

"As long as the primary indicators of economic activity like personal spending and the labor market are showing no signs of weakness, the Fed will be comfortable extending its rate pause through the March FOMC decision at least," said FHN Financial Macro Strategist Will Compernolle.

A separate report released by the Federal Reserve showed an unexpected uptick in U.S. industrial production in the month of December.

The Fed said industrial production inched up by 0.1 percent in December, while revised data showed production was unchanged in November.

Economists had expected industrial production to come in unchanged compared to the 0.2 percent increase originally reported for the previous month.

Later in the day, the Fed is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.

Sector News

Gold stocks have moved sharply on the day, dragging the NYSE Arca Gold Bugs Index down by 2.6 percent to its lowest intraday level in almost two months.

The sell-off by gold stocks comes amid a decrease by the price of the precious metal, with gold for February delivery falling $16.60 to $2,013.60 an ounce.

Considerable weakness is also visible among airline stocks, as reflected by the 2.4 percent slump by the NYSE Arca Airline Index.

Shares of Spirit Airlines (SAVE) have plummeted after a federal judge blocked JetBlue's (JBLU) proposed $3.8 billion acquisition of the discount airline.

Semiconductor, computer hardware and commercial real estate stocks are also seeing notable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index tumbled by 2.1 percent and Hong Kong's Hang Seng Index plunged by 3.7 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has slumped by 1.7 percent, the French CAC 40 Index is down by 1.2 percent and the German DAX Index is down by 0.9 percent.

In the bond market, treasuries are extending the notable downward move 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 3.6 basis points at 4.102 percent.