U.S. Stocks Seeing Considerable Volatility Following Recent Sell-Off

Stocks have seen considerable volatility over the course of morning trading on Wednesday, with the major averages bouncing back and forth across the unchanged line after moving sharply lower over the two previous sessions.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 46.13 points or 0.4 percent at 10,968.76, the S&P 500 is up 3.25 points or 0.1 percent at 3,944.51 and the Dow is up 95.37 points or 0.3 percent at 33,691.71.

The volatility on Wall Street comes as traders express uncertainty about the near-term outlook for the markets ahead of next week’s Federal Reserve meeting.

The Fed still seems poised to slow the pace of interest rate hikes, but recent upbeat economic data has raised concerns about how much further the central bank will raise rates at future meetings.

Traders are likely to pay close attention to the Fed’s accompanying statement, although a lot of key data will be released before the next meeting in late January/early February.

The recent selling on Wall Street partly reflects worries the Fed will be need to push the economy into a prolonged recession in order to bring inflation down close to its 2 percent target.

The negative sentiment was partly offset by a report from the Labor Department showing unit labor costs jumped by much less than previously estimated in the third quarter.

The report showed the surge in unit labor costs in the third quarter was downwardly revised to 2.4 percent from 3.5 percent. The jump in unit labor costs was expected to be downwardly revised to 3.2 percent.

The downward revision to unit labor cost growth reflected an upward revision to labor productivity as well as a downward revision to the spike in hourly compensation.

The data may have helped offset recent inflation concerns, although traders continue to look ahead to Friday’s report on producer price inflation in November.

The University of Michigan is also due to release its preliminary report on consumer sentiment in the month of December on Friday. The report includes readings on inflation expectations that could impact the outlook for interest rates.

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Airline stocks have shown a substantial move to the downside, however, with the NYSE Arca Airline Index plunging by 3.0 percent.

Computer hardware and networking stocks are also seeing considerable weakness, contributing to the drop by the tech-heavy Nasdaq.

On the other hand, housing stocks have moved notably higher, driving the Philadelphia Housing Sector Index up by 1.8 percent.

Gold stocks are also turning in a strong performance amid an increase by the price of the precious metal, with the NYSE Arca Gold Bugs Index climbing by 1.7 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slid by 0.7 percent, while Hong Kong’s Hang Seng Index plummeted by 3.2 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index is down by 0.1 percent and the German DAX Index is down by 0.3 percent.

In the bond market, treasuries have moved to the upside, extending the rebound seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.4 basis points at 3.459 percent.

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