Stocks Pull Back, Snapping Four-Session Winning Streak - U.S. Commentary

(RTTNews) - Following the long Fourth of July weekend, stocks moved mostly lower during trading on Tuesday. The pullback on the day came after the major averages closed higher for four consecutive sessions in the previous week.

The major averages climbed well off their worst levels late in the session but still closed firmly in the red. The Dow slid 108.75 points or 0.6 percent to 17,840.62, the Nasdaq slumped 39.67 points or 0.8 percent to 4,822.90 and the S&P 500 fell 14.40 points or 0.7 percent to 2,088.55.

The weakness on Wall Street came as traders cashed on the strong gains posted last week, which nearly offset the sell-off seen in reaction to Britain's vote to leave the European Union.

After falling sharply last Monday, the major averages showed a substantial rebound. For the week, the Dow surged up by 3.1 percent, the S&P 500 jumped by 3.2 percent and the Nasdaq soared by 3.3 percent.

Renewed worries about the impact of the so-called Brexit also weighed on stocks and pulled the British pound down to its lowest level versus the U.S. dollar in over thirty years.

Traders may also have been expressing some trepidation ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

The report is expected to show an increase of about 180,000 jobs in the month of June after employment edged up by just 38,000 jobs in May.

The Commerce Department released a report this morning showing that new orders for U.S. manufactured goods pulled back in line with economist estimates in May.

The report said factory orders fell by 1.0 percent in May following a 1.8 percent jump in April. The drop in orders matched economist estimates.

Sector News

Energy stocks turned in some of the market's worst performances on the day, moving sharply lower along with the price of crude oil. Crude for August delivery tumbled $2.39 to $46.60 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 4.4 percent, the NYSE Arca Natural Gas Index slumped by 3.2 percent and the NYSE Arca Oil & Gas Index slid by 2.1 percent.

Considerable weakness was also visible among steel stocks, as reflected by the 3.1 percent loss posted by the NYSE Arca Steel Index. The drop by the index came after it ended the previous session at a two-month closing high.

Financial stocks also came under significant selling pressure on the day, with the Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index falling by 2.7 percent and 2.5 percent, respectively.

Computer hardware, chemical, semiconductor and airline stocks also saw notable weakness, while gold stocks bucked the downtrend amid a jump by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index fell by 0.7 percent, while Hong Kong's Hang Seng Index slumped by 1.5 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index and the German DAX Index tumbled by 1.7 percent and 1.8 percent, respectively.

In the bond market, treasuries showed a strong move to the upside, pushing yields down to new record lows. The yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 8.9 basis points to 1.367 percent.

Looking Ahead

Trading on Wednesday may be impacted by reports on international trade and service sector activity as well as the minutes of the latest Federal Reserve meeting.