Stocks Experiencing Choppy Trading As Fed Decision Looms - U.S. Commentary

(RTTNews) - Extending the lackluster performance seen throughout the previous session, stocks have shown a lack of direction over the course of the trading day on Tuesday.

Currently, the major averages are just above the unchanged line. The Dow is up 5.41 points or less than a tenth of a percent at 16,786.42, the Nasdaq is up 13.42 points or 0.3 percent at 4,334.53 and the S&P 500 is up 1.27 points or 0.1 percent at 1,939.05.

The choppy trading on Wall Street comes as traders seem reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement Wednesday afternoon.

While the Fed is widely expected to announce another $10 billion reduction in the pace of asset purchases, traders are likely to focus more on the language of the accompanying statement and the outlook for interest rates.

Along with the statement, the Fed is due to provide an update to its economic projections and Fed Chair Janet Yellen is scheduled to hold a press conference.

Traders are also digesting the latest batch of U.S. economic data, including reports showing a bigger than expected drop in housing starts and a bigger than expected increase in consumer prices.

The Commerce Department released a report before the start of trading showing that housing starts pulled back by more than expected in the month of May after surging higher in the previous month.

The report said housing starts fell 6.5 percent to an annual rate of 1.001 million in May after jumping 12.7 percent to a rate of 1.071 million in April. Economists had expected starts to drop to a rate of 1.030 million.

A separate report from the Labor Department showed that consumer prices rose at their fastest pace in over a year in the month of May.

The consumer price index rose by 0.4 percent in May, the biggest monthly increase since February of 2013. Economists had expected consumer prices to edge up by about 0.2 percent.

Core consumer prices, which exclude food and energy prices, increased 0.3 percent in May after rising by 0.2 percent in the previous month. Core prices had also been expected to tick up by 0.2 percent.

Traders are also keeping an eye on the latest developments in Iraq amid reports that Sunni insurgents continue to advance toward Baghdad.

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Brokerage stocks continue to see significant strength, however, with the NYSE Arca Broker/Dealer Index surging up by 1.9 percent. With the gain, the index has reached its best intraday level in over two months.

E*Trade (ETFC), Charles Schwab (SCHW), and TD Ameritrade (AMTD) are turning in some of the brokerage sector's best performances.

Banking, airline, and steel stocks are also seeing some strength in mid-day trading, although buying interest has remained subdued.

Meanwhile, oil stocks have moved to the downside on the day, giving back some ground after moving notably higher over the past few sessions.

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 Hong Kong's Hang Seng Index dropped by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index rose by 0.4 percent and 0.6 percent, respectively.

In the bond market, treasuries have come under pressure amid concerns about the outlook for inflation. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.7 basis points at 2.644 percent.