- Energy shares drop amid falling crude oil prices.
- Technology extends gains, boosts Nasdaq.
- Market action suggests a cautious approach by investors.
Following a flat opening, major equity indexes in the United States fluctuated in relatively tight ranges on Wednesday as investors continue to assess the potential impact of the tax bill on different parts of the economy.
“It’s hard to speculate on what the final bill is going to say. I think the market moves a little bit on that, but mostly moves on fundamentals and sentiment, which are strong. To the end of the year, investors tend to reposition, making sure their portfolio finishes the year where they wanted and begins the next year where they hope to be,” Sean O‘Hara, director at Pacer Financial Inc., told Reuters.
Although today's EIA data showed a larger-than-expected drawdown in the crude oil inventories in the United States, crude oil prices came under a heavy selling pressure as the underlying details of the report pointed to a rising oil output in the United States. The barrel of West Texas Intermediate recently broke below the $56, losing 3% on the day. The S&P 500 Energy Sector (SPNY) closed the day 1.3% lower.
On the other hand, boosted by robust gains seen in the shares of Microsoft, Alphabet, and Google, the S&P 500 Information Technology Sector rose 0.75% on the day, allowing the tech-heavy Nasdaq Composite to end the day at 6,776.38, up 0.21%.
DJIA technical outlook
Valeria Bednarik, American Chief Analyst at FXStreet, wrote, "the movement remains as corrective, as the index develops far above bullish moving averages, with the closest one being the 20 SMA, now at 23,740. Shorter term, and according to the 4 hours chart, the bearish stance is strong, as the index remained below its 20 SMA, now slowly gaining traction downward, while technical indicators resumed their declines after a modest correction upward within the negative territory."
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