Wall Street rally fed by China optimism loses momentum
Wall Street trimmed early gains and was little changed in early afternoon trading on Wednesday as the rally fueled by hopes of further stimulus measures in China faded.
The three major indexes had been up as much as 1 percent earlier in the day, building on Tuesday’s gains.
China’s Ministry of Finance said on Wednesday the government will strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system, adding to other steps to reenergize sputtering growth.
The Shanghai Composite .SSEC closed 2.3 percent higher on Wednesday. Adding to the positive sentiment, Japan’s Nikkei 225 .N225 rose 7.7 percent, its biggest one-day rise since the global financial crisis, as Prime Minister Shinzo Abe signaled a cut in corporate taxes.
“What’s causing us to trade lower isn’t anything fundamental and is more technical,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.
“The volume has also been a little bit lighter which is indicative of more short covering than … actual buying.”
At 12:58 ET (1658 GMT) the Dow Jones industrial average .DJI was up 1.04 points, or 0.01 percent, at 16,493.72, the S&P 500 .SPX was up 1.3 points, or 0.07 percent, at 1,970.71 and the Nasdaq Composite .IXIC was up 11.38 points, or 0.24 percent, at 4,823.31.
Six of the 10 major S&P sectors were higher with the consumer discretionary index’s .SPLRCD 0.46 percent rise leading the advancers. Netflix (NFLX.O), which was up 6.3 percent and poised to break a seven-day losing streak, was the biggest boost to the index.
“While there is nothing specific causing the pullback, trading is expected to be a bit range-bound till the Fed meeting,” said Brian Fenske, head of sales trading at ITG in New York.
U.S. job openings surged to 5.753 million in July from 5.323 million in June, Labor Department data showed, suggesting strength in the economy ahead of the U.S. Federal Reserve’s interest rate meeting next week.
Apple (AAPL.O) shares were up marginally at $112.70. The iPhone maker is expected to unveil new offerings at its annual conference.
Barnes & Noble (BKS.N) fell 13.7 percent to $14.07 after the largest U.S. bookstore chain reported a decline in sales for the fifth consecutive quarter.
Tetraphase Pharmaceuticals (TTPH.O) sank 79 percent to $9.39 after its experimental bowel drug failed to meet the main goal in a late-stage study.
Dave & Buster’s Entertainment (PLAY.O) jumped 6.7 percent to $39.87 after the restaurant and arcade chain operator raised its 2015 revenue and comparable store sales forecasts.
Advancing issues outnumbered decliners on the NYSE by 1,508 to 1,432. On the Nasdaq, 1,451 issues rose and 1,275 fell.
The S&P 500 index showed 4 new 52-week highs and no new lows, while the Nasdaqrecorded 35 new highs and 30 new lows.