Stocks Close Modestly Lower But Well Off Worst Levels - U.S. Commentary

(RTTNews) - After moving notably lower in early trading on Tuesday, stocks regained some ground over the course of the session but still closed in the red. The losses on the day further offset the rally seen last Friday, which lifted the Dow to its best closing level in over two months.

The major averages ended the day modestly lower but well off their worst levels. The Dow dipped 36.94 points or 0.2 percent to 18,068.23, the Nasdaq fell 17.38 points or 0.4 percent to 4,976.19 and the S&P 500 slipped 6.21 points or 0.3 percent to 2,099.12.

The pullback seen early in the session partly reflected a negative reaction to an extension of the recent global bond market sell-off.

Selling pressure waned not long after the open, however, with a rebound by U.S. bond prices helping to limit the downside for the markets.

Nonetheless, ongoing concerns about the situation in Greece continued to weigh on stocks, as the embattled nation struggles to pay back its debts.

A Greek central bank official told Reuters the country had to empty an emergency International Monetary Fund holding account to repay 750 million euros due to the international lender. Reuters said the move allowed Greece to avoid default but underscores the dire state of the country's finances as it continues to try to strike a deal with its creditors.

Among individual stocks, shares of NewLink Genetics (NLNK) fell sharply on news the biopharmaceutical company will continue a cancer drug study, disappointing investors hoping for an early conclusion.

Web hosting company Rackspace (RAX) also saw significant weakness after providing disappointing second quarter revenue guidance.

Meanwhile, shares of AOL (AOL) moved sharply higher after the media technology company agreed to be acquired by telecom giant Verizon (VZ) for $4.4 billion in cash.

Sector News

Many of the major sectors ended the day showing only modest moves, although considerable weakness was visible among chemical stocks. The Dow Jones Chemicals Index fell by 1.2 percent, pulling back further off the two-month closing high set last Friday.

International Flavors & Fragrances (IFF) turned in one of the chemical sector's worst performances despite reporting better than expected first quarter earnings.

Transportation stocks also moved to the downside, dragging the Dow Jones Transportation Average down by 1.2 percent. Avis Budget Group (CAR) posted a notable loss on the day.

Brokerage and semiconductor stocks also saw some weakness, while gold and oil service stocks moved higher along with the prices of their associated commodities.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region ended Tuesday's trading mixed. Japan's Nikkei 225 Index closed nearly flat, while Australia's All Ordinaries Index advanced by 0.8 percent and Hong Kong's Hang Seng Index slumped by 1.1 percent.

Meanwhile, the major European markets all came under pressure on the day. While the German DAX Index plunged by 1.7 percent, the U.K.'s FTSE 100 Index tumbled by 1.4 percent and the French CAC 40 Index dropped by 1.1 percent.

As mentioned above, treasuries showed a notable turnaround after coming under pressure in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 2.26 percent after reaching a five-month high of 2.335 percent.

Looking Ahead

The economic calendar finally picks up on Wednesday, with traders likely to keep a close eye on a report on retail sales in the month of April.

The closely watched retail sales report is likely to overshadow separate reports on import and export prices and business inventories.