Stocks Close Mixed Following Lackluster Trading Session - U.S. Commentary

(RTTNews) - With trading resuming following the long, holiday weekend, stocks showed a lack of direction throughout the trading session on Tuesday before ending the day mixed. The markets largely held on to the bulk of their recent gains.

The major averages finished the session on opposite sides of the unchanged line. While the Nasdaq climbed 17.92 point or 0.4 percent to 4,598.19, the Dow dipped 30.89 points or 0.2 percent to 17,067.56 and the S&P 500 edged down 1.09 points or 0.1 percent to 2,002.28.

The choppy trading on Wall Street came despite the release of a report from the Institute for Supply Management showing that activity in the U.S. manufacturing sector unexpectedly grew at an accelerated rate in the month of August.

The ISM said its purchasing managers index climbed to 59.0 in August from 57.1 in July, with a reading above 50 indicating growth in the manufacturing sector.

The increase by the manufacturing index came as a surprise to economists, who had expected the index to edge down to 56.8.

With the unexpected increase, the ISM said the manufacturing index rose to its highest level since reaching 59.1 in March of 2011.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The Fed may be more focused on the labor market indicators, but strength like this in the activity surveys will be hard to ignore completely. At the margin, this adds to the case for a first rate hike early next year."

A separate report from the Commerce Department showed that U.S. construction spending rebounded by more than expected in the month of July.

The subdued reaction to the data came as traders seemed reluctant to make any significant moves ahead of a monetary policy announcement from the European Central Bank and the release of the monthly U.S. jobs report later in the week.

Among individual stocks, shares of Compuware (CPWR) moved sharply higher on the day after the software company agreed to be acquired by private equity investment firm Thoma Bravo in a transaction valued at approximately $2.5 billion.

Cruise line operator Norwegian Cruise Line Holdings (NCLH) also turned in a strong performance after announcing an agreement to acquire Prestige Cruises International for about $3 billion.

At the same time, shares of Conn's (CONN) came under pressure after the furniture and appliance retailer reported weaker than expected second quarter earnings and lowered its full-year profit outlook.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster performance by the broader markets.

Gold stocks saw substantial weakness, however, with the NYSE Arca Gold Bugs tumbling by 3.6 percent. The weakness in the sector came as gold for December delivery plunged $22.40 to $1,265 an ounce.

Natural gas, oil service, and utilities stocks also saw some weakness, although selling pressure remained relatively subdued.

On the other hand, airline stocks showed a strong move to the upside on the day, driving the NYSE Arca Airline Index up by 3 percent. With the gain, the index reached a twelve-year closing high.

Brazil's Gol Linhas (GOL) and United Continental (UAL) posted standout gains within the airline sector, jumping by 6.2 percent and 5 percent, respectively.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index jumped by 1.2 percent, while China's Shanghai Composite Index surged up by 1.4 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index closed just below the unchanged line, the U.K.'s FTSE 100 Index inched up by 0.1 percent and the German DAX Index rose by 0.3 percent.

In the bond market, treasuries moved sharply lower on the heels of the upbeat economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, shot up by 7.6 basis points to 2.419 percent.

Looking Ahead

Economic data is likely to remain in focus on Wednesday, with traders likely to keep an eye on reports on private sector employment and factory orders as well as the Federal Reserve's Beige Book.