(RTTNews) – Stocks recovered from initial weakness and were mostly higher in morning trading on Wednesday, but came under significant pressure in the latter part of the session. Major averages moved sharply lower in late trading, partially offsetting recent strength.
The major averages saw further declines towards the end of the session, ending the session at the worst levels of the day. The Dow Jones fell 475.92 points or 1.3 percent to 37,082.00, the Nasdaq fell 225.28 points or 1.5 percent to 14,777.93 and the S&P 500 plummeted 70.02 points or 1.5 percent to 4,698.35.
The late-day sell-off on Wall Street was largely attributed to profit-taking, with traders taking advantage of the strong upside seen in recent sessions.
The Dow Jones and Nasdaq closed higher for a ninth straight session on Tuesday as traders continued to express optimism about the outlook for interest rates.
The uptrend took the Dow Jones to new all-time highs, while the Nasdaq and S&P 500 reached their best levels in almost two years.
A sharp decline in shares of FedEx (FDX) also weighed on the markets, with the delivery giant plunging 12.1 percent on the day.
FedEx’s nosedive came after the company reported weaker-than-expected second-quarter results and cut full-year revenue expectations.
Meanwhile, traders ignored a Conference Board showing a much bigger-than-expected improvement in U.S. consumer confidence, which had helped revive early trading.
The Conference Board said its consumer confidence index rose to 110.7 in December, compared to a downwardly revised 101.0 in November.
Economists had expected the consumer confidence index to rise to 103.4, up from the 102.0 originally reported for the previous month.
A separate report released by the National Association of Realtors showed an unexpected recovery in existing home sales in the US during the month of November.
Sector news
Biotechnology stocks fell sharply during the session, with the NYSE Arca Biotechnology Index plunging 3.4 percent after ending Tuesday’s trading at a five-month high.
Netherlands-based Argenx (ARGX) led the sector lower, plunging 25.1 percent after reporting disappointing results from a late-stage trial of its therapy for an autoimmune disease that causes blisters on the skin.
Significant weakness also emerged among semiconductor stocks, as evidenced by the 2.9 percent decline in the Philadelphia Semiconductor Index. The index reached a record high on Tuesday.
Transportation stocks also saw significant weakness amid FedEx’s sharp decline, which sent the Dow Jones Transportation Average down 2.4 percent.
Banks, networks and gold stocks also came under pressure during the day and fell along with most other major sectors.
Other markets
In overseas trading, stock markets in the Asia-Pacific region were mostly higher on Wednesday. Japan’s Nikkei 225 Index rose 1.4 percent and Hong Kong’s Hang Seng Index rose 0.7 percent, although China’s Shanghai Composite Index broke the uptrend and fell 1.0 percent.
Meanwhile, major European markets showed mixed performance. While the German DAX index fell by 0.1, the French CAC 40 index rose by 0.1 percent and the British FTSE 100 index by 1.0 percent.
In the bond market, government bonds gave up ground after showing initial strength, but rose again in afternoon trading. As a result, the yield on the ten-year benchmark, which moves inversely to the price, fell 4.5 basis points to 3.877 percent.
Looking forward
Trading on Thursday could be affected by a reaction to a slew of U.S. economic data, including reports on weekly jobless claims, manufacturing activity in the Philadelphia region and leading U.S. economic indicators.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.