Following the broad based rally seen in the previous session, stocks are turning in a mixed performance in morning trading on Wednesday. While the Dow and the S&P 500 have reached new record intraday highs, the tech-heavy Nasdaq has shown a sharp pullback.
Currently, the major averages remain on opposite sides of the unchanged line. The Nasdaq is down 66.09 points or 1 percent at 6,846.27, while the Dow is up 87.72 points or 0.4 percent at 23,924.43 and the S&P 500 is up 1.13 points or less than a tenth of a percent at 2,628.17.
The pullback by the Nasdaq may be partly due to profit taking, as traders cash in on recent strength among tech stocks amid concerns the companies won’t see as much of a benefit from proposed tax reform.
Semiconductor stocks have shown a particularly steep drop, dragging the Philadelphia Semiconductor Index down by 3.6 percent. The index is pulling back further off the record closing high set last Friday.
Lam Research (LRCX), Micron Technology (MU), and Applied Materials (AMAT) are turning in some of the semiconductor sector’s worst performances on the day.
Electronic storage, internet, and software stocks are also seeing considerable weakness in morning trading, moving lower along with gold stocks.
On the other hand, banking stocks are extending the rally seen on Tuesday, driving the Dow Jones Banks Index up by 2.8 percent. The index has reached its best intraday level in almost ten years.
The continued strength among banking stocks reflects optimism about tax reform as well as Federal Reserve Chair nominee Jerome Powell’s comments calling financial regulations “tough enough.”
Transportation and brokerage stocks are also moving notable higher, adding to the strong gains posted in the previous session.
The mixed performance on Wall Street comes as traders are keeping an eye on outgoing Fed Chair Janet Yellen’s testimony before the Congressional Joint Economic Committee.
In prepared remarks released ahead of her appearance, Yellen said economic growth appears to have stepped up from its subdued pace early in the year.
Yellen noted inflation has continued to run below the Fed’s 2 percent target but said recent lower readings on inflation likely reflect transitory factors.
The Fed Chair also reiterated that she expects gradual increases in interest rates will be appropriate to sustain a healthy labor market and stabilize inflation around the central bank’s objective.
On the U.S. economic front, the Commerce Department released a report…