Stocks Give Back Ground After Early Upward Move - U.S. Commentary

(RTTNews) - After moving mostly higher earlier in the session, stocks given back some ground over the course of the trading day on Tuesday. The major averages have pulled back off their highs for the session, with the Nasdaq dipping into negative territory.

Currently, the major averages are on opposite sides of the unchanged line. The Nasdaq is down 4.63 points or 0.1 percent at 4,078.98, while the Dow is up 50.93 points or 0.3 percent at 15,888.81 and the S&P 500 is up 5.67 points or 0.3 percent at 1,787.23.

While stocks initially benefited from bargain hunting following recent weakness, traders seemed reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday.

Traders will be closely watching for any comments regarding the outlook for the Fed's asset purchase program following December's decision to begin scaling back stimulus.

A mixed batch of economic data may have added to recent uncertainty about the economy and the likelihood of further tapering by the Fed.

Before the start of trading, the Commerce Department released a report showing an unexpected drop in durable goods orders in the month of December.

The report said durable goods orders tumbled by 4.3 percent in December compared to economist estimates for an increase of about 1.8 percent. The drop largely reflected a 9.5 percent decrease in orders for transportation equipment.

On the other hand, Standard & Poor's released a separate report showing that its index of home prices in major metropolitan areas increased at an annual rate of 13.7 percent in November, reflecting a modest acceleration from the 13.6 percent growth seen in October.

The Conference Board also released a report showing a continued improvement in consumer confidence in the month of January.

The report said the consumer confidence index climbed to 80.7 in January from a downwardly revised 77.5 in December. Economists had expected the index to edge up to 79.0 from the 78.1 originally reported for the previous month.

Meanwhile, the pullback by the tech-heavy Nasdaq partly reflects a steep drop by shares of Apple (AAPL), which are down by 7.6 percent after hitting a three-month intraday low.

Apple reported better than expected first quarter earnings after the close of trading on Monday but reported weaker than expected iPhone sales and provided disappointing revenue guidance for the current quarter.

Sector News

Despite the pullback by the broader markets, housing stocks continue to see considerable strength, with the Philadelphia Housing Sector Index jumping by 3.1 percent. The index is regaining some ground after ending the previous session at its lowest closing level in over a month.

D.R. Horton (DHI) has helped to lead the housing sector higher, with the homebuilder surging up by 9.3 after reporting better than expected first quarter results.

Significant strength also remains visible among biotechnology stocks, as reflected by the 1.5 percent gain being posted by the NYSE Arca Biotechnology Index. Incyte (INCY) and Pharmacyclics (PCYC) are posting notable gains.

Steel, airline, and gold stocks also continue to see strength on the day, while most of the other major sectors are now showing more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. While Japan's Nikkei 225 Index edged down by 0.2 percent, China's Shanghai Composite Index rose by 0.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index jumped by 1 percent, the German DAX Index advanced by 0.6 percent and the U.K.'s FTSE 100 Index increased by 0.3 percent.

In the bond market, treasuries have shown a lack of direction over the course of the session as traders look ahead to the Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.761 percent.