Major Averages Close Firmly In Negative Territory - U.S. Commentary

(RTTNews) - Following the pullback seen in the previous session, stocks saw further downside during trading on Tuesday. With the drop on the day, the major averages pulled back further off the record closing highs set last Friday.

The major averages ended the day firmly in negative territory. The Dow plunged 362.59 points or 1.4 percent to 26,076.89, the Nasdaq slid 64.02 points or 0.9 percent to 7,402.48 and the S&P 500 slumped 31.10 points or 1.1 percent to 2,822.43.

The weakness on Wall Street was partly due to profit taking, with traders cashing in on the recent strength of the markets.

Traders were also looking ahead to the Federal Reserve's monetary policy announcement on Wednesday.

On the U.S. economic front, the Conference Board released a report showing consumer confidence in the U.S. rebounded by more than expected in the month of January.

The Conference Board said its consumer confidence index climbed to 125.4 in January from an upwardly revised 123.1 in December.

Economists had expected the consumer confidence index to rise to 123.6 from the 122.1 originally reported for the previous month.

Energy stocks showed a substantial move to the downside on the day, moving lower along with the price of crude oil. Crude for March delivery tumbled $1.06 to $64.50 a barrel.

Healthcare, semiconductor, and biotechnology stocks also saw considerable weakness amid a broad based sell-off on Wall Street.

In overseas trading, stock markets across the Asia-Pacific region moved to the downside during trading on Tuesday. Japan's Nikkei 225 Index plunged by 1.4 percent, while Hong Kong's Hang Seng Index slumped by 1.1 percent.

The major European markets also moved lower on the day. While the U.K.'s FTSE 100 Index tumbled by 1.1 percent, the German DAX Index and the French CAC 40 Index dropped by 1 percent and 0.9 percent, respectively.

In the bond market, treasuries extended a recent move to the downside. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to a three-year closing high of 2.726 percent.

The Fed announcement is likely to be in focus on Wednesday, overshadowing reports on private sector employment, pending home sales and Chicago-area business activity.