Choppy Trading Persists As Wall Street Awaits Fed Decision

Stocks continue to turn in a lackluster performance in mid-day trading on Wednesday, as traders await the Federal Reserve’s monetary policy announcement. Despite the choppy trading, the tech-heavy Nasdaq has reached a new record intraday high.

Currently, the major averages remain on opposite sides of the unchanged line. While the Nasdaq is up 23.88 points or 0.2 percent at 15,673.48, the Dow is down 87.65 points or 0.2 percent at 35,964.98 and the S&P 500 is down 3.90 points or 0.1 percent at 4,626.75.

Traders seem reluctant to make significant moves as they await the Fed’s latest monetary policy decision, which is due to be announced at 2 pm ET.

The Fed is expected to announce plans to begin gradually scaling back its $120 billion in monthly bond purchases by mid-November or December.

Since tapering is widely expected, traders may pay closer attention to the language of the accompanying statement as they look for clues about the outlook for interest rates.

Traders are also likely to keep an eye on the post-meeting press conference by Fed Chair Jerome Powell, which is set for 2:30 pm ET.

Meanwhile, traders have largely shrugged off a report from payroll processor ADP released showing private sector employment in the U.S. increased by more than expected in the month of October.

ADP said private sector employment jumped by 571,000 jobs in October after surging by a revised 523,000 jobs in September.

Economists had expected private sector employment to climb by 400,000 jobs compared to the addition of 568,000 jobs originally reported for the previous month.

“The job market is revving back up as the Delta-wave of the pandemic winds down,” said Mark Zandi, chief economist of Moody’s Analytics.

“Job gains are accelerating across all industries, and especially among large companies,” he added. “As long as the pandemic remains contained, more big job gains are likely in coming months.”

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

Economists currently expect employment to jump by 425,000 jobs in October after rising by 194,000 jobs in September, while the unemployment rate is expected to edge down to 4.7 percent from 4.8 percent.

A separate report released by the Institute for Supply Management showed growth in U.S. service sector activity accelerated to a new record high in the month of October.

The ISM said its services PMI climbed to 66.7 in October from 61.9 in September, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 62.0.

Sector News

Transportation stocks continue to see considerable weakness in mid-day trading, giving back ground after skyrocketing in the previous session. The Dow Jones Transportation Average is down by 1.8 percent, pulling back off yesterday’s record closing high.

Shares of Avis Budget (CAR) are showing a notable move to the downside after more than doubling in the previous session.

Significant weakness has also emerged among utilities stocks, as reflected by the 1.5 percent drop by the Dow Jones Utilities Average.

On the other hand, housing stocks have shown a significant move to the upside on the day, driving the Philadelphia Housing Sector Index up by 1.4 percent.

Tobacco stocks also continue to turn in a strong performance in mid-day trading, with the NYSE Arca Tobacco Index climbing by 1.4 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance, with the Japanese markets closed for a holiday. China’s Shanghai Composite Index dipped by 0.2 percent, while Australia’s S&P/ASX 200 Index advanced by 0.9 percent.

The major European markets also finished the day mixed. While the U.K.’s FTSE 100 Index fell by 0.4 percent, the German DAX Index closed just above the unchanged line and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries have moved modestly lower over the course of the session after seeing initial strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 1.565 percent.

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