Stocks Close Higher But Well Off Best Levels - U.S. Commentary

(RTTNews) - After moving notably higher in early trading, stocks gave back some ground but managed to end the day modestly higher.

The major averages ended the day in positive territory. The Dow inched up by 17.88 points or 0.1 percent to 18,547.30, the Nasdaq rose 15.47 points or 0.3 percent to 5,260.08 and the S&P 500 edged up by 4.26 points or 0.2 percent to 2,186.90.

The higher close on Wall Street reflected recent underlying upward momentum for the markets in spite of concerns about the possibility of a near-term interest rate hike.

On the U.S. economic front, the Commerce Department released a report this morning showing an unexpected jump in new home sales in the month of July.

The report said new home sales jumped 12.4 percent to an annual rate of 654,000 in July from the revised June rate of 582,000.

The sharp increase in new home sales came as a surprise to economists, who had expected new home sales to drop to a rate of 580,000 from the 592,000 originally reported for the previous month.

With the unexpected increase, new home sales reached their highest annual rate since October of 2007.

Following the release of the report, housing stocks showed a strong move to the upside on the day. Reflecting the strength in the sector, the Philadelphia Housing Sector Index shot up by 1.8 percent.

Energy and tobacco stocks also showed notable upward moves, while gold stocks came under pressure despite an increase by the price of the precious metal.

In overseas trading, stocks markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index dropped by 0.6 percent, while China's Shanghai Composite Index rose by 0.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.6 percent, the French CAC 40 Index climbed by 0.7 percent and the German DAX Index advanced by 0.9 percent.

In the bond market, treasuries have shown a lack of direction ahead of the Treasury's auction of two-year notes. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.548 percent.

Trading on Wednesday may be impacted by reaction to the National Association of Realtors' report on existing home sales in the month of July.