Stocks Come Under Pressure Amid Renewed Fed Worries - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks have come under pressure over the course of the trading day on Tuesday. Renewed concerns about the outlook for the Federal Reserve's stimulus program have inspired traders to cash in on recent strength in the markets.

The major averages have recently edged up off their lows for the session but currently remain in the red. The Dow is down 43.21 points or 0.3 percent at 15,441.05, the Nasdaq is down 15.17 points or 0.4 percent at 3,592.32 and the S&P 500 is down 7.78 points or 0.5 percent at 1,674.72.

The weakness that has emerged on Wall Street is partly in reaction to comments from Kansas City Federal Reserve President Esther George.

In an interview with the Fox Business Network, George said "it's time" for the Fed to begin "adjusting" its asset purchase program in light of signs of an improving economy and labor market.

George, a member of the Fed's policy-setting committee, has voted against the central bank's recent policy actions, calling instead for a statement indicating that the Fed will reduce the pace of its asset purchases in the very near future.

While George's comments should not have come as much of a surprise, the pullback by the markets reflects the ongoing jitters regarding the Fed's stimulus program.

Meanwhile, traders have largely shrugged off the latest batch of economic data, including reports showing that consumer prices and industrial production both rose by a little more than expected in June.

The National Association of Home Builders also released a report showing that homebuilder confidence unexpectedly jumped to a seven-year high in July.

On the earnings front, shares of Coca-Cola (KO) are down by 1.9 percent after the beverage giant reported second quarter earnings that matched analyst estimates but on weaker than expected revenues. The company also reported disappointing volumes for the quarter.

Goldman Sachs (GS) has also moved to the downside even though the financial giant reported second quarter earnings and revenues that came in well above expectations.

Meanwhile, healthcare giant Johnson & Johnson (JNJ) is posting a modest gain after reporting better than expected second quarter results.

Sector News

Oil service stocks have shown a notable move to the downside on the day, dragging the Philadelphia Oil Service Index down by 1.3 percent. The index is pulling back further off the nearly two-year closing high that it set last Monday.

The pullback by oil service stocks comes amid a modest decrease by the price of crude oil, with crude for August delivery sliding $0.21 to $106.11 a barrel.

Significant weakness has also emerged among brokerage and banking stocks, with the NYSE Arca Broker/Dealer Index and the KBW Bank Index down by 1.3 percent and 1.1 percent. Traders are cashing in on recent strength in the financial sectors.

Biotechnology, chemical, and natural gas stocks have also come under pressure on the day, while considerable strength remains visible among gold stocks. The NYSE Arca Gold Bugs Index has surged up by 3.7 percent even though the price of gold is seeing only modest strength.

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 rose by 0.6 percent, while South Korea's KOSPI Index fell by 0.5 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index slid by 0.7 percent, the U.K.'s FTSE 100 Index and the German DAX Index dropped by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries are seeing modest strength, extending a recent upward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, has dipped by 2.2 basis points to 2.534 percent.