WASHINGTON (dpa-AFX) - After an initial move to the upside, stocks have given back ground over the course of the trading session on Wednesday. The major averages have pulled back well off their highs of the session, with the Dow sliding firmly into negative territory.
Currently, the tech-heavy Nasdaq is well off its best levels but still up 113.01 points or 0.7 percent at 17,549.10. The S&P 500 briefly dipped into negative territory but is currently up 1.81 points or less than a tenth of a percent at 5,573.88, while the Dow is down 307.01 points or 0.7 percent at 41,126.47.
The initial strength on Wall Street came following the release of a closely watched Labor Department report showing consumer prices in the U.S. increased by slightly less than expected in the month of February.
The Labor Department said its consumer price index crept up by 0.2 percent in February after climbing by 0.5 percent in January. Economists had expected consumer prices to rise by 0.3 percent.
Excluding food and energy prices, the core consumer price index also rose by 0.2 percent in February following a 0.4 percent increase in January. Core prices were also expected to climb by 0.3 percent.
The report also said the annual rate of consumer price growth slowed to 2.8 percent in February from 3.0 percent in January. Economists had expected the pace of price growth to edge down to 2.9 percent.
The annual rate of core consumer price growth also slowed to 3.1 percent in February from 3.3 percent in January. Core price growth was expected to dip to 3.2 percent.
The tamer-than-expected inflation led to some optimism about the Federal Reserve resuming interest rate cuts in the near future.
'With a lower-than-expected inflation number (both month-over-month and year-over-year), at least the Fed still has the flexibiilty to step in to support a weaker economy, and that would be good news for markets,' said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
Buying interest waned shortly after the start of trading, however, as concerns about the impact of new trade policies continue to weigh on the markets.
With new U.S. steel and aluminum imports taking effect today, the European Union said it would impose counter tariffs on 26 billion euros ($28 billion) worth of U.S. goods beginning next month.
Canada has also announced it will impose 25 percent tariffs on more than $20 billion worth of U.S. goods in retaliation for the steel and aluminum duties
Sector News
Airline stocks have moved sharply lower over the course of the session, dragging the NYSE Arca Airline Index down by 2.7 percent to its lowest intraday level in five months.
Considerable weakness has also emerged among telecom stocks, as reflected by the 1.8 percent loss being posted by the NYSE Arca North American Telecom Index.
Housing and pharmaceutical stocks have also moved to the downside, while strength remains visible among semiconductor stocks, with the Philadelphia Semiconductor Index jumping by 1.9 percent.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday. China's Shanghai Composite Index dipped by 0.2 percent and Hong Kong's Hang Seng Index slid by 0.8 percent, although Japan's Nikkei 225 Index bucked the downtrend and inched up by 0.1 percent.
Meanwhile, the major European markets have moved to the upside on the day. While the German DAX Index is up by 1.3 percent, the French CAC 40 Index is up by 0.5 percent and the U.K.'s FTSE 100 Index is up by 0.3 percent.
In the bond market, treasuries have shown a lack of direction over the course of the session. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 4.291 percent.
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