U.S. Stocks Close Lower After Seeing Initial Strength

(RTTNews) - After failing to sustain an initial upward move, stocks showed a lack of direction over the course of the trading session on Tuesday. The tech-heavy Nasdaq pulled back firmly into negative territory, but the Dow and the S&P 500 spent the day bouncing back and forth across the unchanged line.

The major averages all finished the day in negative territory, although the Nasdaq underperformed its counterparts. While the Nasdaq plunged 122.43 points or 1.4 percent to 8,607.73, the Dow edged down 32.23 points or 0.1 percent to 24,101.55 and the S&P 500 fell 15.09 points or 0.5 percent to 2,863.39.

The initial strength on Wall Street partly reflected continued optimism that the U.S. is seeing "the light at the end of the tunnel" of the coronavirus pandemic.

A number of states such as George, South Carolina and Colorado have already stated reopening, while other states like New York have announced plans to begin reopening in the coming weeks.

President Donald Trump's administration has also unveiled a plan to ramp up testing, which experts have said is the most important step toward reopening the economy.

Buying interest waned shortly after the start of trading, however, inspiring some traders to cash in on recent strength in the markets.

The initial jump lifted the major averages to their best intraday levels in well over a month, which may have led some traders to believe the recent recovery has been overdone.

Notable declines by Google parent Alphabet (GOOGL), Amazon (AMZN), Facebook (FB) and Apple (AAPL) weighed on the tech-heavy Nasdaq.

The choppy trading on Wall Street also came as traders looked ahead to the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged at near-zero levels, although the central bank could provide additional guidance regarding how long it plans to keep rates at their current levels.

Some economists have also suggested the Fed could take steps toward yield curve control, announcing targeted asset purchases as part of an effort to pin down longer-term yields.

On the U.S. economic front, the Conference Board released a report showing consumer confidence deteriorated significantly in the month of April.

The Conference Board said its consumer confidence index plunged to 86.9 in April after tumbling to a downwardly revised 118.8 in March. Economists had expected the index to plummet to 90.0 from the 120.0 originally reported for the previous month.

Sector News

Biotechnology stocks moved sharply lower over the course of the session, with the NYSE Arca Biotechnology Index tumbling by 2.6 percent after reaching a record intraday high in early trading.

Significant weakness also emerged among software stocks, as reflected by the 2.3 slump by the Dow Jones U.S. Software Index.

Healthcare, pharmaceutical and retail stocks also moved to the downside on the day, contributing to the pullback by the broader markets.

On the other hand, substantial strength remained visible among housing stocks, as reflected by the 4.7 percent spike by the Philadelphia Housing Sector Index.

Homebuilder D.R. Horton (DHI) posted a standout gain after reporting fiscal second quarter results that exceeded analyst estimates.

Oil service stocks also held on to strong gains, driving the Philadelphia Oil Service Index up by 4.4 percent. The rally by oil service stocks came despite a decrease by the price of crude oil.

Tobacco, chemical and banking stocks also saw notable strength on the day, helping to limit the downside for the markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index jumped by 1.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index spiked by 1.9 percent, the French CAC 40 Index and the German DAX Index surged up by 1.4 percent and 1.3 percent, respectively.

In the bond market, treasuries rebounded following the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.6 basis points to 0.610 percent.

Looking Ahead

The Fed announcement is likely to be in the spotlight on Wednesday, but traders are also likely to keep an eye on the Commerce Department's preliminary report on first quarter GDP.

On the earnings front, Alphabet, Advanced Micro Devices (AMD), Ford (F), and Starbucks (SBUX) are among the companies releasing their quarterly results after the close of today's trading.

Boeing (BA), Carnival (CCL), General Electric (GE), MasterCard (MA), Royal Caribbean (RCL), and Yum! Brands (YUM) are also among the companies due to report their results before the start of trading on Wednesday.