Dow drifts lower, S&P 500 loses grip on 4,700 as energy and tech sectors lead Wednesday slump

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U.S. stocks were headed modestly lower midday Wednesday, but stocks remain within striking distance of record closing highs, aided by gains in large-cap information technology shares, including Tesla Inc. TSLA, +3.54% and Apple Inc. AAPL, +2.40%, which were finding bids.

Nagging concerns about inflation and the economic recovery from COVID-19 have held markets in check, but a lack of alternatives and hope that consumers can continue to serve as a pillar of the economic rebound are supporting gains and a fitful rotation into sectors of the market.

How are stock-index futures trading?
  • The Dow Jones Industrial Average DJIA, -0.44% traded 181 points, or 0.5%, lower at 35,961.
  • The S&P 500 SPX, -0.09% was trading at 4,695, down 6 points, or 0.1%.
  • The Nasdaq Composite Index COMP, +0.02% pivoted higher in midday action after early losses, trading flat at 15,974.

On Tuesday, the Dow rose 54 points, or 0.2%, to close at 36,142. The S&P 500 rose 18 points, or 0.4%, to 4,700 and the Nasdaq Composite jumped 120.01 points, or 0.8%, to end at 15,973.

What’s driving markets?

A slight retreat in Treasury yields on Wednesday was helping to cap declines for the broader market and buoying large-cap technology stocks.

Investors, however, were struggling to justify pushing equities to new heights after the Nasdaq Composite and S&P 500 ended yesterday’s session within a stone’s throw of all-time highs and the Dow industrials hovered just outside 1% from its closing record.

Market participants were heartened on Tuesday by better-than-expected October retail sales data and a batch of third-quarter corporate earnings. Data showed retail sales jumped 1.7%, beyond forecasts for a 1.5% rise and the biggest gain since March when households received billions in federal stimulus money.

Shares of Walmart rival Target TGT, -5.13% fell Wednesday, even as the retailer beat quarterly earnings forecasts and lifted its forecasts, but warned about rising costs hurting margins.

Shares of Lowe’s LOW, +0.37% surged Wednesday, after the home improvement retailer reported fiscal third-quarter profit and revenue that beat expectations, a surprise increase in same-store sales, and raised its full-year outlook.

However, Visa V, -5.18% fell sharply after Amazon AMZN, +1.24% said it would stop accepting payments made by its credit cards issued in the U.K. starting next year due to high commissions.  

“While investors are not reversing course from the stock market, rotation in our opinion is to blame for the uneven market performances,” said Peter Cardillo, chief market economist at Spartan Capital, in a note to clients.

Meanwhile, the enthusiasm for buying might abate somewhat, as investors position for thinning trading volumes in the last full week of trading before Thanksgiving holidays.

Wednesday’s action will feature a packed schedule of appearances by Federal Reserve members, with that list including New York Fed President John Williams, Fed Gov. Michelle Bowman, San Francisco President Mary Daly and Fed President Charles Evans.

Which companies are in focus?
  • Shares of Roku Inc. ROKU, -10.82% are getting pummeled Wednesday after an analyst downgraded the stock and suggested that investors have misinterpreted the company’s story as of late.
  • Moderna Inc. MRNA, +4.02% said Wednesday it has applied for authorization of its COVID-19 vaccine in Canada for children aged 6 to 11.
  • Biogen Inc. shares BIIB slid Wednesday, after the company said it had received a “negative trend vote” from an advisory committee to the European Medicines Agency for its Alzheimer’s disease treatment aducanumab.
  • Visa Inc.’s stock V dove 5.6% toward a nine-month low in morning trading Wednesday, enough to pace the Dow and S&P 500 in losses, after Amazon.com Inc. AMZN said it would stop accepting Visa credit cards issued in the U.K. next year.
  • Pfizer Inc. PFE said Wednesday it’s launching a search for a new chief financial officer because its current CFO Frank D’Amelio will retire.
  • Alcoa CorpAA said Wednesday that it has bought group annuity contracts that will help transfer $1 billion in pension obligations for defined-benefit pension plans for certain retirees and beneficiaries in the U.S.
How are other assets trading?
  • The yield on the 10-year Treasury note  TMUBMUSD10Y, 1.617% was flat at around 1.64%. Yields and debt prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, -0.06%,  a measure of the currency against a basket of six major rivals, was steady.
  • The Stoxx Europe 600  SXXP, +0.14% closed up 0.1%, while London’s FTSE 100  UKX, -0.49% declined 0.5%.
  • The Shanghai Composite  SHCOMP, +0.44% rose 0.4%, while the Hang Seng Index HSI, -0.25% fell 0.2% and Japan’s Nikkei 225 NIK, -0.40% fell 0.4%