Stocks Close Mixed After Seeing Early Weakness - U.S. Commentary

(RTTNews) - After moving mostly lower early in the session, stocks regained some ground over the course of the trading day on Tuesday. The major averages bounced well off their worst levels of the day, with the tech-heavy Nasdaq climbing into positive territory.

While the Nasdaq managed to end the day up 7.93 points or 0.2 percent at 4,937.43, the Dow and the S&P 500 remained stuck in the red. The Dow slid 128.34 points or 0.7 percent to 17,849.08, while the S&P 500 dipped 6.99 points or 0.3 percent to 2,074.20.

The early weakness on Wall Street was partly due to profit taking following yesterday's rally, which largely offset the losses seen last week.

Selling pressure remained somewhat subdued, however, leading to the subsequent recovery attempt by the broader markets.

Traders may have been reluctant to take significant positions ahead of the announcement of the Federal Reserve's latest monetary policy decision on Wednesday.

The Fed is not expected to announce an increase in interest rates, but traders will be paying close attention to any changes to the accompanying statement.

In light of upbeat employment data, many analysts expect the Fed to remove the word "patient" regarding when it plans to begin normalizing monetary policy.

However, many of the economic reports other than the jobs report have shown signs of weakness, leading some analysts to predict that the Fed will remain dovish.

The Commerce Department released a report before the start of today's trading showing a substantial decrease in housing starts in the month of February.

The report said housing starts plummeted by 17.0 percent to an annual rate of 897,000 in February from the revised January estimate of 1.081 million. Economists had been expecting housing starts to dip to 1.048 million.

With the much bigger than expected decrease, housing starts fell to their lowest annual rate since January of last year.

On the other hand, the report said building permits climbed 3.0 percent to an annual rate of 1.092 million in February from the revised January rate of 1.060 million.

Building permits, an indicator of future housing demand, had been expected to inch up to 1.058 million from the 1.053 million originally reported for January.

Sector News

While many of the major sectors ended the day showing only modest moves, considerable weakness was visible among gold stocks. Reflecting the weakness in the gold sector, the NYSE Arca Gold Bugs Index fell by 1.6 percent.

The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for April delivery sliding $5 to $1,148.20 an ounce.

Chemical stocks also saw notable weakness on the day, dragging the Dow Jones Chemicals Index down by 1.2 percent to its lowest closing level in over a month. DuPont (DD) helped to lead the sector lower, falling by 3.1 percent.

Meanwhile, airline stocks showed a strong move to the upside over the course of the session, resulting in a 1.6 percent gain by the NYSE Arca Airline Index. American Airlines (AAL) posted a standout gain amid news that it will replace Allergan (AGN) in the S&P 500 Index.

Significant strength also emerged among steel stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca Steel Index. The gain by the index came after it ended Monday's trading at a nearly six-year closing low.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index advanced by 1 percent, while China's Shanghai Composite Index surged up by 1.6 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the French CAC 40 Index fell by 0.6 percent and the German DAX Index slumped by 1.5 percent.

In the bond market, treasuries extended their recent upward trend ahead of the looming Fed decision. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dropped by 4 basis points to 2.058 percent.

Looking Ahead

The Fed is likely to be in the spotlight on Wednesday, with the central bank's monetary policy statement due to be followed up by a press conference by Fed Chair Janet Yellen.

On the earnings front, Oracle (ORCL) and Adobe Systems (ADBE) are among the companies releasing their quarterly results after the close of today's trading.