U.S. Stocks Continue To Experience Choppy Trading

(RTTNews) - After showing a lack of direction early in the session on Tuesday, stocks continue to turn experience choppy trading. Despite the lackluster performance, the Dow managed to reach a new record intraday high in early trading.

The major averages have moved to the downside in recent trading, with the Nasdaq and the S&P 500 hitting new lows. The Dow is down 16.84 points or 0.1 percent at 27,342.32, the Nasdaq is down 21.09 points or 0.3 percent at 8,237.10 and the S&P 500 is down 7.05 points or 0.2 percent at 3,007.25.

The choppy trading on Wall Street comes as a mixed batch of U.S. economic data has led to uncertainty about the near-term outlook for interest rates.

Raising concerns the Federal Reserve could refrain from cutting rates later this month, the Commerce Department released a report showing much stronger than expected U.S. retail sales growth.

The Commerce Department said retail sales rose by 0.4 percent in June, matching the downwardly revised increase in May. Economists had expected retail sales to inch up by 0.1 percent.

Closely watched core retail sales, which exclude autos, gasoline, building materials and food services, jumped by 0.7 percent in June after climbing by an upwardly revised 0.6 percent in May.

ING Chief International Economist James Knightley said the report suggests consumer spending rose robustly in the second quarter, which he expects to help keep GDP growth above 2 percent.

"Despite this, financial markets continue to price in four 25 basis point interest rate cuts from the Federal Reserve over the next 18 months," Knightley said.

He added, "Yet, in an environment where growth is solid, core inflation is close to target, unemployment is near 50-year lows and stock markets are at all-time highs, there seems little justification for anything more than precautionary rate cuts."

Meanwhile, a separate report from the Fed showed U.S. industrial production was unexpectedly flat June, as a steep drop in utilities output offset increases in manufacturing and mining output.

The Fed said industrial production was unchanged in June after climbing by 0.4 percent in May. Economists had expected production to edge up by 0.2 percent.

Traders are also digesting earnings news from big-name companies such as Goldman Sachs (GS), Johnson & Johnson (JNJ), JPMorgan (JPM), and Wells Fargo (WFC).

Sector News

Most of the major sectors continue to show only modest moves in mid-day trading, contributing to the lack of direction being shown by the broader markets.

Transportation stocks continue to see substantial strength, however, with the Dow Jones Transportation Average surging up by 2.1 percent to its best intraday level in over two months.

J.B. Hunt Transport Services (JBHT) has led the sector higher after the trucking company reported better than expected adjusted second quarter earnings on revenues that exceeded estimates.

Significant strength is also visible among steel stocks, as reflected by the 1.6 percent jump by the NYSE Arca Steel Index.

Oil service stocks are also seeing notable strength on the day, while considerable weakness has emerged among utilities and software stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index slid by 0.7 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index rose by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index advanced by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries are giving back ground after moving modestly higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.6 basis points at 2.136 percent.
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