Overseas Weakness Leads To Lower Close On Wall Street - U.S. Commentary

(RTTNews) - After trending higher over the past several sessions, stocks gave back some ground during trading on Tuesday. The S&P 500 pulled back off yesterday's record closing high, although selling pressure remained relatively subdued.

The major averages ended the day firmly in negative territory. The Dow fell 55.16 points or 0.3 percent to 17,983.07, the Nasdaq slid 29.47 points or 0.6 percent to 4,777.44 and the S&P 500 dropped 10.22 points or 0.5 percent to 2,080.35.

Weakness in the overseas markets contributed to the pullback on Wall Street, with stocks across both the Asia-Pacific region and Europe moving sharply lower on the day.

Concerns about the political situation in Greece contributed to the weakness in Europe after the country's parliament failed to elect a president.

Peter Boockvar, managing director at the Lindsey Group, said the biggest market risk is not what happens politically or economically in Greece but if the developments there impact what the European Central Bank wants to do going forward.

"The possibility of the Syriza party winning the January 25th election, 3 days after the ECB's next meeting, won't likely alter Draghi's plans for sovereign QE but it could complicate it," Boockvar said.

Worries about the impact that the recent drop in crude oil prices will have on the oil and gas industry also generated some negative sentiment.

Reflecting the impact on the industry, Civeo (CVEO) said it has reduced headcount in its Canadian and U.S. operations by 30 percent and 45 percent, respectively, from levels at the beginning of 2014.

Civeo, which provides temporary and long-term housing for oil workers, also slashed its spending and suspended its dividend. Shares of Civeo plunged by 52.6 percent on the day.

Meanwhile, traders largely shrugged off a report from the Conference Board showing a rebound in consumer confidence in the month of December.

The Conference Board said its consumer confidence index climbed to 92.6 in December from an upwardly revised 91.0 in November.

Sector News

After moving sharply higher over the past several sessions, utilities stocks showed a notable move back to the downside on the day. The Dow Jones Utilities Average tumbled by 2.1 percent, pulling back off yesterday's record closing high.

American Water Works (AWK), Duke Energy (DUK), and AES Corp. (AES) turned in some of the utilities sector's worst performances.

Significant weakness was also visible among natural gas stocks, as reflected by the 1.6 percent loss posted by the NYSE Arca Natural Gas Index. Southwestern Energy (SWN) led the sector lower after announcing plans to increase capital spending in 2015.

Oil service also saw considerable weakness on the day, with the Philadelphia Oil Service Index falling by 1.5 percent even though the price of crude oil turned higher.

Meanwhile, gold stocks showed a substantial move to the upside, resulting in a 4 percent jump by the NYSE Arca Gold Bugs Index. The strength in the sector came as gold for February delivery surged up $18.50 to $1,200.40 an ounce.

Airline stocks also turned in a strong performance, driving the NYSE Arca Airline Index up by 1.3 percent to a new twelve-year closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index plunged by 1.6 percent, while Hong Kong's Hang Seng Index slumped by 1.1 percent.

The major European markets also came under pressure on the day. While the French CAC 40 Index tumbled by 1.7 percent, the U.K.'s FTSE 100 Index and the German DAX Index dropped by 1.3 percent and 1.2 percent, respectively.

In the bond market, treasuries gave back ground after seeing initial strength but still closed modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.7 basis points to 2.19 percent.

Looking Ahead

Reports on jobless claims, pending home sales, and Chicago business activity may attract attention on Wednesday, although trading activity is likely to be somewhat subdued due to it being New Year's Eve.