Stocks Close Mixed As Highly Anticipated Fed Statement Looms - U.S. Commentary

(RTTNews) - After seeing considerable volatility in early trading, stocks turned in a relatively lackluster performance throughout the remainder of the trading day on Tuesday. The major averages eventually ended the session on opposite sides of the unchanged line.

Pulling back further off last Friday's record closing high, the tech-heavy Nasdaq edged down 4.82 points or 0.1 percent to 5,055.42, while the Dow climbed 72.17 points or 0.4 percent to 18,110.14 and the S&P 500 rose 5.84 points or 0.3 percent to 2,114.76.

The volatility seen early in the session was partly due to conflicting reports regarding Iranian forces seizing a cargo ship traveling through the Strait of Hormuz.

Initial reports indicated the vessel was a U.S. cargo ship, but Pentagon officials denied the reports and said the ship was flagged to the Marshall Islands.

Officials said a U.S. Navy destroyer has nonetheless been ordered to the region to keep an eye on the situation. U.S. Navy planes are also monitoring the area.

Uncertainty about the Federal Reserve's monetary policy announcement contributed to the choppy trading seen for the rest of the session. The Fed is due to announce its latest interest rate decision Wednesday afternoon.

While the Fed is widely expected to keep interest rates unchanged, traders will be paying close attention to any hints regarding the outlook for rates.

Several recent economic reports have shown signs of weakness, leading many analysts to predict the Fed will delay its first rate hike until later in the year.

The Conference Board released a report this morning showing an unexpected pullback in U.S. consumer confidence in the month of April.

The report said the consumer confidence index tumbled to 95.2 in April from an upwardly revised 101.4 in March, while economists had expected the index to climb to a reading of 102.5.

Among individual stocks, shares of Twitter (TWTR) fell sharply late in the session, as the social media giant released its first quarter results ahead of schedule. Twitter reported weaker than expected sales and provided disappointing guidance.

Appliance maker Whirlpool (WHR) also came under pressure on the day after the company reported first quarter results that missed estimates and cut its full-year profit forecast.

Meanwhile, shares of Merck (MRK) moved notably higher after the drug giant beat Wall Street's first quarter earnings and sales expectations.

Sector News

Many of the major sectors ended the day showing only modest moves, contributing to the lackluster performance by the broader markets.

Gold stocks saw substantial strength, however, with the NYSE Arca Gold Bugs Index surging up by 3.7 percent. With the gain, the index reached a nearly two-month closing high.

The strength among gold stocks came amid a continued increase by the price of the precious metal, with gold for June delivery climbing $10.70 to $1,213.90 an ounce after jumping by $28.20 an ounce on Monday.

Significant strength was also visible among software stocks, as reflected by the 1.4 percent gain posted by the Dow Jones Software Index. The gain lifted the index to its best closing level in almost fifteen years.

While networking and telecom stocks also saw notable strength, biotechnology stocks added to the steep losses posted in the previous session. The NYSE Arca Biotechnology Index fell by 1.5 percent to a two-month closing low.

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 rose by 0.4 percent, while China's Shanghai Composite Index tumbled by 1.1 percent.

Meanwhile, the major European markets all came under pressure on the day. While the U.K.'s FTSE 100 Index slumped by 1 percent, the French CAC 40 Index and the German DAX Index plunged by 1.8 percent and 1.9 percent, respectively.

In the bond market, treasuries moved notably lower over the course of the session as traders looked ahead to the Fed statement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 4.9 basis points to 1.973 percent.

Looking Ahead

The Fed is likely to be in the spotlight on Wednesday, although traders will also be presented with reports on first quarter GDP and pending home sales prior to the release of the statement from the central bank.

On the earnings front, MasterCard (MA) and Time Warner (TWX) are among the companies due to report their quarterly results before the start of trading on Wednesday.