Stocks Move Modestly Higher Amid Light Trading - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks have moved modestly higher over the course of the trading day on Tuesday. The upward move on the day comes on the heels of the losses posted in the two previous sessions.

In recent trading, the major averages have given back some ground, but they are holding on to modest gains. The Dow is up 73.44 points or 0.4 percent at 17,864.61, the Nasdaq is up 10.52 points or 0.2 percent at 5,040.49 and the S&P 500 is up 5.74 points or 0.3 percent at 2,090.17.

The strength that has emerged on Wall Street may be partly due to bargain hunting following the notable pullback seen Friday and Monday.

The Dow fell to its lowest intraday level in over two months in early trading on Monday before regaining some ground over the course of the session.

A modest move to the upside by treasuries may also be generating some positive sentiment, with the strength pulling bond yields down further off their recent highs.

Nonetheless, traders still seem somewhat reluctant to make any significant moves ahead of the Federal Reserve's highly anticipated monetary policy announcement on Wednesday.

The Fed is not expected to announce an increase in interest rates due to some recent signs of economic sluggishness, but traders will be paying close attention to any hints regarding the timing of the first rate hike.

The monetary policy statement will be accompanied by a press conference by Fed Chair Janet Yellen as well as the central bank's latest forecasts.

On the U.S. economic front, the Commerce Department released a report before the start of trading showing a bigger than expected pullback in housing starts in the month of May.

The Commerce Department said housing starts tumbled 11.1 percent to an annual rate of 1.036 million in May after jumping 22.1 percent to a seven-year high of 1.165 million in April. Economists had expected starts to drop to an annual rate of 1.090 million.

Meanwhile, the report also said building permits, an indicator of future housing demand, jumped 11.8 percent to an annual rate of 1.275 million in May from the revised April rate of 1.140 million.

The increase in building permits came as a surprise to economists, who had expected permits to drop to a rate of 1.105 million.

Sector News

Despite the strength being shown by the broader markets, most of the major sectors continue to show only modest moves in mid-day trading.

Software, tobacco, and biotechnology stocks are seeing some strength on the day, although buying interest has remained relatively subdued.

On the other hand, weakness remains visible among gold stocks, with the NYSE Arca Gold Bugs Index down by 1.1 percent after hitting a nearly six-month intraday low.

The weakness in the gold sector comes amid a decrease by the price of the precious metal, as gold for August delivery is falling $8.20 to $1,177.60 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region once again moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index slumped by 0.6 percent, while Hong Kong's Hang Seng Index tumbled by 1.1 percent.

Meanwhile, European stocks moved mostly higher over the course of the session. The French CAC 40 Index and the German DAX Index both rose by 0.5 percent, although the U.K.'s FTSE 100 Index close nearly unchanged.

In the bond market, treasuries have moved moderately higher, extending their recent recovery. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.3 basis points at 2.325 percent.