(RTTNews) - After trending higher over the past several sessions, stocks are giving back some ground during trading on Wednesday. The major averages have all moved to the downside, although selling pressure has remained somewhat subdued.
Currently, the major averages are off their lows of the session but still in the red. The Dow is down 390.52 points or 0.8 percent at 50,917.27, the Nasdaq is down 190.21 points or 0.7 percent at 26,903.69 and the S&P 500 is down 36.93 points or 0.5 percent at 7,572.85.
The pullback on Wall Street comes amid uncertainty about the situation in the Middle East, as negotiations between the U.S and Iran continue to drag on.
U.S. Central Command said U.S. forces successfully defeated multiple Iranian ballistic missiles and drones and conducted "self-defense" strikes on Qeshm Island in response to attempted attacks by Iran on Tuesday.
The ongoing military exchanges have contributed to a sharp increase by the price of crude oil, with U.S. crude oil futures surging by more than 2 percent.
However, stocks have recently been able to shrug off concerns about the war amid persistent optimism about strong earnings and resilient economic growth.
"For now, risk appetite remains supported, but with stretched valuations and shifting monetary policy expectations, markets appear increasingly sensitive to any signs that the earnings and growth story may begin to soften," said Daniela Hathorn, Senior Market Analyst at Capital.com.
In U.S. economic news, the Institute for Supply Management released a report showing its reading on U.S. service sector activity increased by more than expected in the month of May.
The ISM said its services PMI rose to 54.5 in May from 53.6 in April, with a reading above 50 indicating growth. Economists had expected the index to tick up to 53.7.
Sector News
Software stocks have shown a substantial move to the downside on the day, with the Dow Jones U.S. Software Index plunging by 3.6 percent.
A decrease by the price of gold is also weighing on gold stocks, as reflected by the 2.3 percent slump by the NYSE Arca Gold Bugs Index.
Airline, banking and telecom stocks are also seeing considerable weakness, while oil, biotechnology and semiconductor stocks are turning in strong performances.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index surged by 2.5 percent, while Hong Kong's Hang Seng Index slumped by 1.6 percent.
Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index is down by 1.3 percent, the French CAC 40 Index is down by 0.5 percent and the U.K.'s FTSE 100 Index is down by 0.3 percent.
In the bond market, treasuries have moved lower amid the sharp increase by the price of crude oil. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 0.3 percent at 4.485 percent.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
