U.S. Stocks Regain Ground After Early Move To The Downside

Stocks moved mostly lower early in the session on Tuesday but have regained ground over the course of the trading day. The major averages have climbed well off their worst levels, with the Nasdaq reaching positive territory.

The Nasdaq is currently off its highs of the session but still up 18.18 points or 0.1 percent at 17,210.71. Meanwhile, the S&P 500 is down 11.29 points or 0.2 percent at 5,349.50 and the Dow is down 189.97 points or 0.5 percent at 38,678.07.

The early weakness came as some traders looked to cash in on yesterday’s modest gains, which lifted the Nasdaq and the S&P 500 to new record closing highs.

Selling pressure waned shortly after the start of trading, however, as traders remain reluctant to make significant moves ahead of two major economic events on Wednesday.

Early trading on Wednesday is likely to be driven by reaction to the Labor Department’s closely watched report on consumer price inflation in the month of May.

Economists expect consumer prices to inch up by 0.1 percent in May after climbing by 0.3 percent in April, while core consumer prices, which exclude food and energy prices, are expected to increase by 0.3 percent for the second straight month.

The annual rate of growth by consumer prices is expected to come in unchanged at 3.4 percent, but the annual rate of core consumer price growth is expected to slow to 3.5 percent in May from 3.6 percent in April.

The data could have a significant impact on the outlook for interest rates ahead of the Federal Reserve’s monetary policy announcement later in the day.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to pay close attention to the accompanying statement as well as officials’ latest projections for the economy and interest rates.

Sector News

Despite the lackluster performance by the broader markets, banking stocks have moved sharply lower on the day, dragging the KBW Bank Index down by 2.0 percent to its lowest intraday level in nearly two months.

Gold stocks are also seeing considerable weakness even though the price of the precious metal is moving higher, with the NYSE Arca Gold Bugs Index down by 1.5 percent.

Significant weakness is also visible among housing stocks, as reflected by the 1.4 percent loss being posted by the Philadelphia Housing Sector Index.

Steel, brokerage and airline stocks have also shown notable moves to the downside, while most of the other major sectors are showing more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index slid by 0.8 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index has slumped by 1.2 percent, the U.K.’s FTSE 100 Index is down by 0.9 percent and the German DAX Index is down by 0.6 percent.

In the bond market, treasuries are regaining ground following the pullback seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 4.455 percent.

Business News