U.S. Stocks Move Moderately Lower After Seeing Early Strength

(RTTNews) - After failing to sustain an early move to the upside, stocks moved moderately lower over the course of the trading session on Tuesday. The major averages added to the losses posted during Monday's session, with the Nasdaq and the S&P 500 pulling back further off last Friday's record closing highs.

The major averages dipped to new lows for the session in the latter part of the trading day. The Dow slid 154.10 points or 0.4 percent to 44,247.83, the Nasdaq fell 49.45 points or 0.3 percent to 19,687.24 and the S&P 500 slipped 17.94 points or 0.3 percent to 6,034.91.

The weakness that emerged on Wall Street came as traders continued to cash in on recent strength in the markets ahead of the release of the Labor Department's closely watched report on consumer price inflation on Wednesday.

"There's been little sign of the hoped-for 'Santa rally' across markets today as Wall Street continues to be distracted ahead of tomorrow's inflation data," said Danni Hewson, head of financial analysis at AJ Bell.

The report is expected to show consumer prices rose by 0.2 percent for the fifth straight month in November, while the annual rate of consumer price growth is expected to tick up to 2.7 percent in November from 2.6 percent in October.

Core consumer prices, which exclude food and energy prices, are expected to increase by 0.3 percent for the fourth straight month in November. The annual rate of growth by core consumer prices is expected to remain at 3.3 percent.

While the Federal Reserve is widely expected to lower rates by another 25 basis points next week, the data could impact the outlook for future rate cuts by the central bank.

CME Group's FedWatch Tool is currently indicating an 86.1 percent chance the Fed will lower rates by a quarter point next week but a 69.1 percent chance the central bank will then leave rates unchanged in late January.

Sector News

Computer hardware stocks moved sharply lower on the day, with the NYSE Arca Computer Hardware Index plunging by 3.8 percent after ending Monday's trading at a nearly five-month closing high.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.5 percent slump by the Philadelphia Semiconductor Index.

Housing stocks also saw considerable weakness on the day, dragging the Philadelphia Housing Sector Index down by 2.1 percent.

Homebuilder Toll Brothers (TOL) led the sector lower after reporting fiscal fourth quarter earnings and revenues that beat estimates but weaker than expected unadjusted homebuilding gross margin.

On the other hand airline stocks showed a strong move to the upside, driving the NYSE Arca Airline Index up by 1.7 percent. Alaska Air Group (ALK) soared by 13.2 percent after raising its fourth quarter profit forecast.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. While Japan's Nikkei 225 Index rose by 0.5 percent, Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, European stocks moved mostly lower on the day. The French CAC 40 Index slumped by 1.1 percent, the U.K.'s FTSE 100 Index slid by 0.9 percent and the German DAX Index edged down by 0.1 percent.

In the bond market, treasuries extended the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.2 basis points to 4.221 percent.