Stocks Close In The Red Following Late-Day Pullback - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout much of the trading day on Tuesday before moving mostly lower going into the close. The late-day pullback extended the downward trend shown by the markets over the past few sessions.

The major averages ended the day mixed, however, as the Nasdaq managed to cling to a modest gain. While the Nasdaq edged up 2.97 points or 0.1 percent to 3,768.25, the Dow fell 66.79 points or 0.4 percent to 15,334.59 and the S&P 500 dipped 4.42 points or 0.3 percent to 1,697.42.

The selling pressure seen late in the trading day likely reflected renewed uncertainty about the outlook for the markets following the volatility seen over the past week.

Following last Wednesday's Federal Reserve-inspired rally, stocks have moved mostly lower, with the Dow and the S&P 500 offsetting last week's gains.

"It's very unusual action considering how so much of the year's gains have been driven by the help of QE," said Peter Boockvar, chief market analyst at the Lindsey Group.

He added, "We've either reached a point where the market can't keep using the same excuse to rally with the same effectiveness or we assume that the taper is coming soon anyway."

Renewed uncertainty about the outlook for the Fed's asset purchase program also weighed on the markets, as mixed remarks from Fed officials already have traders looking ahead to the October meeting.

On the economic front, the Conference Board released a report this morning showing a drop in U.S. consumer confidence in the month of September.

The Conference Board said its consumer confidence index dipped to 79.7 in September from an upwardly revised 81.8 in August. Economists had been expecting the index to edge down to 80.0.

Lynn Franco, Director of Economic Indicators at the Conference Board, said the drop in consumer confidence reflected renewed concerns about the short-term outlook for both jobs and earnings.

"While overall economic conditions appear to have moderately improved, consumers are uncertain that the momentum can be sustained in the months ahead," Franco said.

The concerns expressed by consumers in the Conference Board's survey seem to reflect similar worries plaguing members of the Federal Reserve.

A separate report released by Standard & Poor's before the start of trading showed that home prices in major metropolitan areas were up by 12.4 percent year-over-year in July.

Sector News

Despite the late-day pullback by the broader markets, most of the major sectors ended the day showing only modest moves.

While some weakness was visible among software, banking, and real estate stocks, housing, electronic storage and health insurance stocks held on to some of their earlier gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday following the overnight weakness on Wall Street. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index dropped by 0.8 percent.

Meanwhile, the major European markets moved back to the upside on the day. While the French CAC 40 Index advanced by 0.6 percent, the German DAX Index and the U.K.'s FTSE 100 Index rose by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries moved notably higher over the course of the session, extending their recent upward trend. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.1 basis points to a one-month closing low of 2.653 percent.

Looking Ahead

A fresh batch of economic data may impact trading on Wednesday, with traders likely to keep a close eye on reports on durable goods orders and new home sales.