Stocks Continue To Experience Choppy Trading - U.S. Commentary

(RTTNews) - Stocks continue to show a lack of direction in mid-day trading on Tuesday following the long, holiday weekend. Even with the lackluster performance, the markets are largely holding on to the bulk of their recent gains.

Currently, the major averages continue to turn in a mixed performance on the day. While the Nasdaq is up 6.71 points or 0.2 percent at 4,486.98, the Dow is down 42.77 points or 0.3 percent at 17,055.68 and the S&P 500 is down 3.75 points or 0.2 percent at 1,999.62.

The choppy trading on Wall Street comes despite the release of a report from the Institute for Supply Management showing that activity in the U.S. manufacturing sector unexpectedly grew at an accelerated rate in the month of August.

The ISM said its purchasing managers index climbed to 59.0 in August from 57.1 in July, with a reading above 50 indicating growth in the manufacturing sector. The increase came as a surprise to economists, who had expected the index to edge down to 56.8.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The Fed may be more focused on the labor market indicators, but strength like this in the activity surveys will be hard to ignore completely. At the margin, this adds to the case for a first rate hike early next year."

A separate report from the Commerce Department showed that U.S. construction spending rebounded by more than expected in the month of July.

The subdued reaction to the data comes as traders seem reluctant to make any significant moves ahead of a monetary policy announcement from the European Central Bank and the release of the monthly U.S. jobs report later in the week.

Among individual stocks, shares of Compuware (CPWR) have moved sharply higher after the software company agreed to be acquired by private equity investment firm Thoma Bravo in a transaction valued at approximately $2.5 billion.

Cruise line operator Norwegian Cruise Line Holdings (NCLH) is also turning in a strong performance after announcing an agreement to acquire Prestige Cruises International for about $3 billion.

At the same time, shares of Conn's (CONN) have come under pressure after the furniture and appliance retailer reported weaker than expected second quarter earnings and lowered its full-year profit outlook.

Sector News

Most of the major sectors continue to show only modest moves, contributing to the lack of direction being shown by the broader markets.

Gold stocks are seeing substantial weakness, however, with the NYSE Arca Gold Bugs tumbling by 3.1 percent. The weakness in the sector comes as gold for December delivery has plunged $23.10 to $1,264.30 an ounce.

Utilities, oil service, and telecom stocks are also seeing notable weakness in mid-day trading, although selling pressure has remained relatively subdued.

On the other hand, airline stocks have shown a strong move to the upside on the day, driving the NYSE Arca Airline Index up by 1.8 percent. United Continental (UAL) and Delta (DAL) are posting standout gains within the sector.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index jumped by 1.2 percent, while China's Shanghai Composite Index surged up by 1.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index closed just below the unchanged line, the U.K.'s FTSE 100 Index inched up by 0.1 percent and the German DAX Index rose by 0.3 percent.

In the bond market, treasuries continue to see notable weakness on the heels of the upbeat economic data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.2 basis points at 2.405 percent.