After an initial move to the upside, stocks showed a lack of direction over the course of the trading session on Tuesday. The major averages bounced back and forth across the unchanged line before ending the day firmly negative.
The major averages finished the session at their worst closing levels in well over a month. The Dow fell 173.14 points or 0.6 percent to 31,145.30, the Nasdaq slid 85.96 points or 0.7 percent to 1,544.91 and the S&P 500 dipped 16.07 points or 0.4 percent to 3,908.19.
The choppy trading on Wall Street came as traders expressed some uncertainty about the near-term outlook for the markets following recent weakness.
While some traders have sought to pick up stocks at reduced levels, recent bargain hunting efforts have not gained much traction amid lingering concerns about the outlook for interest rates and the global economy.
The volatility on the day also came amid a surge in treasury yields, with the yield on the benchmark ten-year note jumping to its highest levels in almost three months.
Potentially adding to the worries about interest rates, the Institute for Supply Management released a report showing service sector activity in the U.S. unexpectedly grew at a slightly faster rate in the month of August.
The ISM said its services PMI inched up to 56.9 in August from 56.7 in July, with a reading above 50 indicating growth in the sector. The uptick surprised economists, who had expected the index to dip to 55.1.
The report is a positive sign for the economy but may have led to concerns the Federal Reserve will see the data as an indication that it can continue to aggressively raise interest rates.
Comments from Fed officials, including Chair Jerome Powell, are likely to attract attention in the coming days along with the central bank’s Beige Book.
Tobacco stocks showed a significant move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 2.4 percent to its lowest closing level in well over a year.
Considerable weakness also emerged among natural gas stocks, as reflected by the 1.7 percent decrease by the NYSE Arca Natural Gas Index. The weakness in the sector came amid a steep drop by the price of natural gas.
Networking stocks also saw notable weakness on the day, with the NYSE Arca Networking Index falling by 1.6 percent to a one-month closing low.
Computer hardware, biotechnology and oil service stocks also moved to the downside, while commercial real estate stocks turned in a strong performance.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. China’s Shanghai Composite Index jumped by 1.4 percent and Japan’s Nikkei 225 Index closed just above the unchanged line, while Australia’s S&P/ASX 200 Index fell by 0.4 percent.
Meanwhile, European stocks finished a choppy session mostly higher. While the German DAX Index advanced by 0.9 percent. the French CAC 40 Index and the U.K.’s FTSE 100 Index both edged up by 0.2 percent.
In the bond market, treasuries pulled back sharply following the rebound seen last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 14.7 basis points to a nearly three-month closing high of 3.340 percent.
Reaction to remarks by Fed officials, the Beige Book and a report on the U.S. trade deficit may drive trading on Wednesday.
Source: Read Full Article