Overseas Weakness Weighs On Wall Street - U.S. Commentary

(RTTNews) - After turning in lackluster performances over the past several days, stocks moved mostly lower during trading on Tuesday. The losses on the day came after the major averages closed mixed for five consecutive sessions.

The major averages ended the day well off their lows for the session but still firmly in negative territory. The Dow fell 90.74 points or 0.5 percent to 18,313.77, the Nasdaq slumped 46.46 points or 0.9 percent to 5,137.73 and the S&P 500 slid 13.81 points or 0.6 percent to 2,157.03.

Weakness overseas weighed on the U.S. markets, with European stocks showing a notable move to the downside on the day.

European banking stocks helped to lead the way lower, as traders remain skeptical about the results of the recently released stress test results.

The weakness overseas came even after Japanese Prime Minister Shinzo Abe's cabinet approved an economic stimulus package worth more than 28 trillion yen.

The stimulus package, which was outlined by Abe in a speech last week, includes 13.5 trillion yen in fiscal measures.

In U.S. economic news, the Commerce Department released a report before the start of trading showing that personal spending increased by slightly more than expected in the month of June.

The report said personal spending climbed by 0.4 percent in June, matching the increase seen in May. Spending had been expected to rise by about 0.3 percent.

Meanwhile, the Commerce Department also said personal income edged up by 0.2 percent for the second straight month. Economists had expected income to increase by 0.3 percent.

Overall trading activity remained somewhat subdued, however, as traders continued to look ahead to some key events later this week.

The Bank of England's monetary policy decision on Thursday is likely to be in focus along with the monthly U.S. jobs report due on Friday.

Sector News

Airline stocks showed a significant move to the downside, dragging the NYSE Arca Airline Index down by 3.9 percent. With the drop, the index fell to its lowest closing level in almost a month.

Delta Air Lines (DAL) helped to lead the sector lower, tumbling by 7.8 percent after reporting a 7.0 percent year-over-year decline in consolidated passenger unit revenue.

Considerable weakness also emerged among brokerage stocks, as reflected by the 2 percent loss posted by the NYSE Arca Broker/Dealer Index. LPL Financial (LPLA) and Stifel (SF) turned in two of the sector's worst performances.

Steel stocks also came under pressure on the day, resulting in a 1.8 percent drop by the NYSE Arca Steel Index. The index continued to give back ground after reaching its highest closing level in over a year last Friday.

Railroad, computer hardware and semiconductor stocks also saw notable weakness, while gold stocks bucked the downtrend amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 1.5 percent, while Australia's All Ordinaries Index fell by 0.9 percent. The Hong Kong market was closed due to a typhoon warning.

The major European markets also came under pressure on the day. While the U.K.'s FTSE 100 Index fell by 0.7 percent, the German DAX Index and the French CAC 40 Index both slumped by 1.8 percent.

In the bond market, treasuries moved to the downside, extending the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 4.1 basis points to 1.537 percent.

Looking Ahead

Reports on private sector employment and service sector activity may attract attention on Wednesday along with the latest batch of earnings news.

AIG (AIG), Electronic Arts (EA), Etsy (ETSY), and Fitbit (FIT) are among the companies releasing their quarterly results after the close of today's trading.

Additionally, Clorox (CLX), Energizer (ENR), Office Depot (ODP), and Time Warner (TWX) are due to report their results before the start of trading on Wednesday.