Investors Ease Back on the Gas Pedal

Investors eased back on the gas pedal on Wednesday, allowing stocks to make slight declines.

Stocks generally made slight declines during Wednesday’s trading session, although the Nasdaq 100 Index managed to accomplish an advance. The better-than-expected ADP National Employment Report failed to spark a rally, as investors remained acutely aware of the fact that the ADP results do not necessarily correlate with the all-important non-farm payrolls report from the Bureau of Labor Statistics. The December non-farm payrolls report will be released on Friday.

The ADP National Employment Report indicated that 238,000 new, private sector payroll jobs had been added during December, beating economists’ expectations that only 205,000 new private sector jobs would be reported.

The Dow Jones Industrial Average (NYSEARCA:DIA) lost 68 points to finish Wednesday’s trading session at 16,462 for a 0.41 percent decline. The S&P 500 (NYSEARCA:SPY) dipped 0.02 percent to finish at 1,837.  The Nasdaq 100 (NASDAQ:QQQ) advanced 0.27 percent to finish at 3,567. The Russell 2000 (NYSEARCA:IWM) dipped 0.01 percent to end the day at 1,157.

In other major markets, oil (NYSEARCA:USO) sank 1.25 percent to close at $33.16. On London’s ICE Futures Europe Exchange, March futures for Brent crude oil declined 4 cents (0.04 percent) to $106.95/bbl. (NYSEARCA:BNO). February gold futures declined $4.60 (0.37 percent) to $1,225.00 per ounce (NYSEARCA:GLD).

Transports made it uphill through the snow on Wednesday, as the Dow Jones Transportation Average (NYSEARCA:IYT) climbed 0.45 percent.

In Japan, the exchange rate for the yen remained as the dominant factor in stock market activity. Stocks made big gains Wednesday as the yen weakened to 104.99 per dollar during Wednesday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (NYSEARCA:FXY). Japan’s retail sector also had a great day. The Nikkei 225 Stock Average jumped 1.94 percent to 16,121 (NYSEARCA:EWJ).

Stocks declined modestly in mainland China as the intense smog inspired investors to dump energy and materials sector stocks. Meanwhile, in Hong Kong, the retail sector led a rally. The Shanghai Composite Index declined 0.15 percent to 2,044 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index soared 1.25 percent to 22,996 (NYSEARCA:EWH).

In Europe, stocks took a slight dip after Eurostat reported that the unemployment rate remained unchanged in November. In the Eurozone, the unemployment rate remained at 12.1 percent. In the greater, 28-nation European Union, the unemployment rate held at 10.9 percent. The Euro STOXX 50 Index dipped 0.01 percent to 3,110 on Wednesday – remaining above its 50-day moving average of 3,039. Its Relative Strength Index is 60.93 (NYSEARCA:FEZ).

Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,797 after slipping 0.02 percent to finish Wednesday’s trading session at 1,837.49, compared with Tuesday’s close at 1,837.88. Its Relative Strength Index declined from 62.23 to 61.98. The MACD just crossed below the signal line, which would suggest that the S&P could continue its decline during the immediate future.

On Wednesday, three sectors advanced, five sectors declined and the technology sector remained unchanged.

Consumer Discretionary (NYSEARCA:XLY): -0.27%
Technology: (NYSEARCA:XLK): unchanged
Industrials (NYSEARCA:XLI): -0.17%
Materials: (NYSEARCA:XLB): +0.59%
Energy (NYSEARCA:XLE): -0.70%
Financials: (NYSEARCA:XLF): +0.34%
Utilities (NYSEARCA:XLU): -0.53%
Health Care: (NYSEARCA:XLV): +0.88%
Consumer Staples (NYSEARCA:XLP): -0.75%

Bottom line: Investors took a breather on Wednesday, as stock prices retreated slightly, despite a better-than-expected ADP National Employment Report for December.

John Nyaradi is the author of The ETF Investing Premium Newsletter.

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