(RTTNews) - Stocks closed mixed for a second straight session on Wednesday, giving up earlier gains following news that the Federal Reserve left interest rates near record lows amid continued economic concerns. The major averages finished on opposite sides of the unchanged mark, extending their lackluster performance.

The choppy trading came after the Fed left its target for the federal funds rate unchanged in a range from zero to a quarter percent and reiterated its assessment that “exceptionally” low rates will continue for an “extended period.”

Heading into the announcement, the Fed was expected to leave rates unchanged, though there had been some expectation that the central bank would start to pave the way for an eventual rate hike down the road.

The equity markets saw considerable upside this morning as traders bought into the market despite a pair of rather lukewarm economic reports.

The Institute for Supply Management said that activity in the service sector grew for the second consecutive month in October, but the pace of growth unexpectedly slowed compared to the previous month.

The index of activity in the service sector edged down to 50.6 in October from 50.9 in September, with a reading above 50 indicating growth in the sector. The decrease by the index came as a surprise to economists, who had expected the index to rise to 51.5.

Separately, Automatic Data Processing, Inc. (ADP) reported that private sector employment continued to decrease in the month of October, although the pace of job losses slowed for the seventh consecutive month.

Non-farm private employment fell by 203,000 jobs in October following a revised decrease of 227,000 jobs in September. Economists had expected a loss of 198,000 jobs compared to the decrease of 254,000 jobs originally reported for the previous month.

The major averages all saw notable downside in late day trading, pushing the tech-heavy Nasdaq into negative territory. The Nasdaq closed down by 1.80 points or 0.1 percent at 2,055.52, while the Dow rose by 30.23 points or 0.3 percent to 9,802.14 and the S&P 500 gained 1.09 points or 0.1 percent to close at 1,046.50.

Sector News

Health insurance stocks saw substantial strength on the day, as Republican victories in gubernatorial elections in Virginia and New Jersey generated optimism that more liberal healthcare reforms will face increased opposition on Capitol Hill.

The strength in the health insurance sector resulted in a 4.7 percent gain by the Morgan Stanley Healthcare Payor Index. With the climb, the index broke out of a recent trading range, reaching its best closing level in over a month.

Pharmaceutical, steel and gold stocks also held onto strong gains, while notable weakness emerged among banking stocks. The Kbw Bank Index slid by 2.1 percent, setting its lowest closing level in just over three months.

Trucking and commercial real estate stocks also pulled back by sizable margins, with the Dow Jones Trucking Index and the Morgan Stanley REIT Index falling by 2.7 percent and 2.4 percent, respectively. The trucking index ended the session at its worst closing level in three months.

Dow Components

Merck (MRK) turned in one of the Dow’s best performances, climbing by 6.4 percent on the day. With the advance, the stock bounced off of Tuesday’s two-month closing low.

McDonald’s (MCD) also rose by a sizable margin, advancing by 1.8 percent. The stock was able to finish the session at its best closing price in five months.

Microsoft (MSFT), Cisco (CSCO), Disney (DIS), Intel (INTC) and Pfizer (PFE) also moved higher on the session, while Kraft (KFT) posted a steep decline, falling by 3.2 percent. The pullback by Kraft came after its third quarter revenues failed to meet Wall Street expectations.

JP Morgan Chase (JPM), DuPont (DD), Alcoa (AA), and General Electric (GE) also fell, although by more modest margins. Notably, General Electric slipped to its lowest closing price in just under two months.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed moderately higher on Wednesday. Japan’s benchmark Nikkei 225 Index rose by 0.4 percent, while Hong Kong’s Hang Seng Index climbed 1.8 percent.

The major European markets also moved notably higher on the day, with the U.K.’s FTSE 100 and the German DAX Index advancing 1.4 percent and 1.7 percent, respectively, while the French CAC 40 Index rose by 2.4 percent.

In the bond markets, treasuries saw notable weakness following the Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed at 3.546 percent, posting a gain of 7.3 basis points.

Looking Ahead

Thursday, the markets may focus on the latest reports on jobless claims and productivity, while traders will also look to interest rate decisions from the Bank of England and the European Central Bank.

Trading on Thursday could also be impacted by reaction to the latest batch of earnings news, including quarterly results from networking giant Cisco.

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Posted in Categories: Economy, Eurozone, Japan, Releases, UK, USA.

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