Stocks Close Mostly Higher Following Yesterday's Sell-Off - U.S. Commentary

(RTTNews) - While buying interest was somewhat subdued, stocks managed to end Tuesday's trading mostly higher. The gains on the day partly offset the steep drop seen in the previous session, although the major averages remain well off their recent highs.

The major averages finished the session in positive territory but well off their best levels of the day. The Dow edged up 23.16 points or 0.1 percent to 17,619.51, the Nasdaq climbed 28.40 points or 0.6 percent to 4,986.87 and the S&P 500 rose 5.48 points or 0.3 percent to 2,063.12.

The rebound on Wall Street was partly due to bargain hunting following yesterday's sell-off, which pulled the Dow down to its lowest closing level in almost five months.

The S&P 500 also ended the previous session at its worst closing level in three months, while the Nasdaq dropped to a nearly two-month closing low.

Concerns about Greece helped to limit the upside for the markets, however, as the debt-laden country appears set to default on a 1.55 billion euro payment due to International Monetary Fund.

The potential default comes as the Greek government prepares to hold a public referendum on Sunday on the bailout proposals offered to the country by its creditors.

German Chancellor Angela Merkel has said any new talks would have to wait until after the Greek referendum, brushing off reports of a new round of negotiations.

However, Malta's Prime Minister Joseph Muscat told parliament Greece has offered to suspend its planned referendum if negotiations are reopened and an agreement is reached.

"They are ready to suspend their referendum or ask the people to vote 'yes' instead of 'no' if a package is put on the table with which they could agree," Muscat said.

At the same time, Muscat warned that the offer from Greece could be either a breakthrough or just a ploy to gain more time.

Strategists at Bank of America Merrill Lynch said, "Greece continues to dominate the headlines again, with a surprising referendum likely to drive near-term sentiment."

"Still, for our broader macro view, we continue to expect robust U.S. growth, a stronger U.S. dollar and a Fed rate hike in September," they added.

With the focus on Greece, traders largely shrugged off the latest batch of U.S. economic data, including reports on home prices, consumer confidence and Chicago-area business activity.

Sector News

Biotechnology stocks showed a substantial move to the upside on the day, driving the NYSE Arca Biotechnology Index up by 2.4 percent. The index regained some ground after falling sharply over the four previous sessions.

Agios Pharmaceuticals (AGIO) and Celldex Therapeutics (CLDX) turned in two of the biotech sector's best performances, jumping by 6.5 percent and 6.6 percent, respectively.

Significant strength was also visible among airline stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Airline Index. The gain by the index came after it plunged by 3.5 percent on Monday.

Brokerage and internet stocks also saw notable strength following the steep losses posted in the previous session.

Meanwhile, steel stocks saw some further downside, dragging the NYSE Arca Steel Index down by 2.3 percent. With the drop, the index fell to a six-year closing low.

Considerable weakness was also visible in the electronic storage sector, with the NYSE Arca Disk Drive Index tumbling by 2.3 percent to its worst closing level in a year.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region showed notable rebounds during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.6 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent.

Meanwhile, the major European markets moved sharply lower over the course of the session. While the German DAX Index slumped by 1.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index tumbled by 1.5 percent and 1.6 percent, respectively.

In the bond market, treasuries showed a lack of direction for much of the day before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.335 percent.

Looking Ahead

News out of Greece is likely to remain in the spotlight on Wednesday, potentially overshadowing U.S. reports on private sector employment and national manufacturing activity.