Financial Stocks Lead The Way Lower On Wall Street - U.S. Commentary

(RTTNews) - Following the long holiday weekend, stocks moved mostly lower over the course of the trading session on Tuesday. With the drop on the day, the tech-heavy Nasdaq pulled back off the record closing high set last Friday.

The major averages ended the day in negative territory but off their lows of the session. The Dow fell 58.96 points or 0.3 percent to 19,826.77, the Nasdaq slid 35.39 points or 0.6 percent to 5,538.73 and the S&P 500 dipped 6.75 points or 0.3 percent to 2,267.89.

Financial stocks turned in some of the market's worst performances on the day, contributing to the overall weakness on Wall Street.

Morgan Stanley (MS) posted a notable loss, tumbling by 3.8 percent even though the financial services giant reported better than expected fourth quarter results.

Reflecting the weakness in the financial sector, the Dow Jones Banks Index plunged by 3.4 percent and the NYSE Arca Broker/Dealer Index slumped by 2.5 percent.

Significant weakness was also visible among biotechnology stocks, as reflected by the 2.3 percent drop by the NYSE Arca Biotechnology Index.

Within the biotech sector, Alcobra (ADHD) posted a particularly steep loss after its attention deficit hyperactivity disorder drug failed a late-stage trial.

Telecom, railroad, and semiconductor stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Meanwhile, gold stocks bucked the downtrend, resulting in a 2.8 percent jump by the NYSE Arca Gold Bugs Index. The strength in the sector came as gold for February delivery surged up $16.70 to $1,212.90 an ounce.

The weakness on Wall Street came following British Prime Minister Theresa May's "Brexit" speech in which she said the U.K. will not seek to "hold on to bits of EU membership."

The U.K. also will not seek to adopt deals that are already available to other countries, May said in a speech at the Lancaster House. Britain "cannot be half in and half out," she said.

May also said Britain will not seek to remain in the single market, as it would mean not leaving the EU at all. However, she said the country will try to gain the "greatest possible" access to the EU.

Nonetheless, traders seemed somewhat reluctant to make more significant moves ahead of the release of some closely watched economic data later this week.

Traders are likely to keep a close eye on reports on industrial production, consumer prices, and housing starts as well as the Federal Reserve's Beige Book.

Citigroup (C), Goldman Sachs (GS), American Express (AXP), IBM (IBM), and General Electric (GE) are also among a slew of companies due to report their quarterly results this week.

Additionally, President-elect Donald Trump's inaugural address on Friday is also likely to attract considerable attention.

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 1.5 percent, while Hong Kong's Hang Seng Index climbed by 0.5 percent.

Meanwhile, the major European markets all moved lower on the day. While the U.K.'s FTSE 100 Index tumbled by 1.5 percent, the French CAC 40 Index fell by 0.5 percent and the German DAX Index edged down by 0.1 percent.

In the bond market, treasuries moved back to the upside following the pullback seen last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.3 basis points to 2.327 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to reports on consumer prices, industrial production, and homebuilder confidence.

The Federal Reserve is also due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, which may shed some light on the outlook for interest rates.

On the earnings front, financial giants Citigroup and Goldman Sachs are due to report their quarterly results before the start of trading on Wednesday.