Stocks Close Modestly Lower After Another Lackluster Session - U.S. Commentary

(RTTNews) - After turning in a relatively lackluster performance throughout much of the session, stocks ended Tuesday's trading modestly lower. The markets continued to experience choppy trading after ending the previous session mixed.

The major averages closed in negative territory but well off their lows for the session. The Dow dipped 21.29 points or 0.1 percent to 16,722.34, the Nasdaq edged down 3.12 points or 0.1 percent to 4,234.08 and the S&P 500 slipped 0.73 points or less than a tenth of a percent to 1,924.24.

Profit taking contributed to the modest weakness on Wall Street, with the Dow and the S&P 500 giving back some ground after ending yesterday's trading at new record closing highs.

Activity remained light, however, as traders seemed reluctant to make any significant moves ahead of the European Central Bank meeting on Thursday and the release of the closely watched monthly U.S. jobs report on Friday.

A Commerce Department report showing a bigger than expected increase in U.S. factory orders may also have helped to limit the downside for the markets.

The report said factory orders increased by 0.7 percent in April after jumping by an upwardly revised 1.5 percent in March. Economists had expected orders to climb by about 0.5 percent.

The factory orders report does not typically attract much attention due to the volatility of the data and the fact that it is usually viewed as old news.

Among individual stocks, shares of Quiksilver (ZQK) saw substantial weakness on the day after the sports apparel and footwear retailer reported a much wider than expected second quarter loss on a bigger than expected drop in sales.

Doughnut maker Krispy Kreme (KKD) also came under pressure after the company reported first quarter earnings in line with estimates but cut its full-year earnings guidance.

On the other hand, shares of Hillshire Brands (HSH) moved notably higher on news that Pilgrim's Pride (PPC) has raised its offer to acquire the meat producer to $55 per share.

Sector News

Contributing to the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves.

Railroad stocks saw considerable weakness, however, with the Dow Jones Railroads Index falling by 1.2 percent. With the drop, the index gave back some ground after ending the previous session at a new record closing high.

Trinity Industries (TRN), Greenbrier (GBX) and American Railcar (ARII) turned in some of the railroad sector's worst performances.

Software, trucking, and internet stocks also saw some weakness on the day, while strength was visible among semiconductor and biotechnology stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index advanced by 0.7 percent and 0.9 percent, respectively, while Australia's All Ordinaries Index dropped by 0.7 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the German DAX Index and French CAC 40 Index both ended the day down by 0.3 percent.

In the bond market, treasuries slid firmly into negative territory as the day progressed, pulling back further off last week's highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.9 basis points to 2.593 percent.

Looking Ahead

Trading on Wednesday could be impacted by the release of a slew of U.S. economic data, including reports on private sector employment, international trade, and service sector activity.

The Federal Reserve is also due to release its Beige Book, although trading activity may remain subdued ahead of the ECB meeting and the monthly jobs report later in the week.