After moving mostly higher early in the session, stocks gave back ground over the course of the trading day on Tuesday. The Dow and the S&P 500 reached new record intraday highs in early trading but subsequently pulled back near the unchanged line.
The major averages ended the day narrowly mixed. While the Dow edged down 15.90 points or less than a tenth of a percent to 41,606.18, the S&P 500 inched up 1.49 points or less than a tenth of a percent to 5,634.58 and the Nasdaq rose 35.93 points or 0.2 percent to 17,628.06.
Optimism about the outlook for interest rates contributed to early strength on Wall Street, but buying interest waned over the course of the session.
Stocks ended the day little changed following the release of a Commerce Department report unexpectedly showing a modest increase by U.S. retail sales in the month of August.
The Commerce Department said retail sales inched up by 0.1 percent in August after surging by an upwardly revised 1.1 percent in July.
The uptick surprised economists, who had expected retail sales to dip by 0.2 percent compared to the 1.0 percent jump originally reported for the previous month.
While the data is positive for the economy, it was seen as reducing the likelihood the Federal Reserve will lower interest rates by 50 basis points when announcing its highly anticipated monetary policy decision on Wednesday.
“Despite a lot of concern about the health of the US consumer, the latest data shows resilience rather than the kind of weakness that would warrant a big opening gambit from the Fed,” said Danni Hewson, head of financial analysis at AJ Bell.
She added, “A 50 basis point cut might be perceived as worry, an indication that they’ve waited too long to change tack, whilst a slow and steady unwinding suggests control and is less likely to be viewed through a political lens.”
The Federal Reserve also released a separate report showing industrial production in the U.S. rebounded by much more than anticipated in the month of August.
Sector News
Oil service stocks moved sharply higher along with the price of crude oil, resulting in a 3.2 percent spike by the Philadelphia Oil Service Index.
Significant strength was also visible among airline stocks, as reflected by the 2.5 percent surge by the NYSE Arca Airline Index. The index ended the session at its best closing level in two months.
Oil producer and computer hardware stocks also saw notable strength on the day, while pharmaceutical stocks came under pressure, dragging the NYSE Arca Pharmaceutical Index down by 1.3 percent.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index slumped by 1.0 percent, while Hong Kong’s Hang Seng Index surged by 1.4 percent.
Meanwhile, the major European markets all moved higher on the day. While the U.K.’s FTSE 100 Index rose by 0.4 percent, the German Index and the French CAC 40 Index both climbed by 0.5 percent.
In the bond market, treasuries showed a modest move back to the downside ahead of the Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 2.1 basis points to 3.642 percent.
Looking Ahead
The Federal Reserve’s monetary policy decision and accompanying statement is likely to be in the spotlight on Wednesday.
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