30.07.2013 22:21:59

Stocks Close Roughly Flat Amid Uncertainty Ahead Of Fed - U.S. Commentary

(RTTNews) - Stocks turned in a relatively lackluster performance over the course of the trading day on Tuesday before ending the session roughly flat. Lingering uncertainty about the Federal Reserve contributed to the choppy trading on the day.

The Dow ended the day down 1.38 points or less than a tenth of a percent at 15,520.59, while the S&P 500 inched up 0.63 points or less than a tenth of a percent to 1,685.96.

On the other hand, strength among technology stocks provided a boost to the Nasdaq, which rose 17.33 points or 0.5 percent to 3,616.47. The gain lifted the Nasdaq to a nearly thirteen-year closing high.

The roughly flat close by the markets came as traders seemed reluctant to make any significant moves as the Federal Reserve kicked off its two-day monetary policy meeting.

The Fed is not scheduled to release its post-meeting statement until Wednesday afternoon, and traders are likely to be on edge until then.

While the Fed is not expected to announce an immediate change in monetary policy, traders will be looking for any signals regarding the September meeting.

A recent Bloomberg News survey showed that a growing number of economists expect the Fed to trim its monthly bond buying to $65 billion in September from the current pace of $85 billion.

The choppy trading also came amid the release of a mixed batch of economic data, including reports showing continued home price growth and a bigger than expected drop in consumer confidence.

Standard & Poor's released a report before the start of trading showing continued growth in home prices in major U.S. metropolitan areas in the month of May.

The report showed the strongest annual rate of growth by the S&P/Case-Shiller 20-City Composite Home Price Index since March of 2006.

Separately, the Conference Board said its consumer confidence index dropped to 80.3 in July from a revised 82.1 in June. Economists had been expecting the index to dip to 81.0 from the 81.4 originally reported for the previous month.

The bigger than expected decrease by the consumer confidence index came after it reached a more than five-year high in June.

Sector News

While many of the major sectors ended the day showing only modest moves, considerable strength was visible among networking stocks. The NYSE Arca Networking Index surged up by 2.7 percent to a two-year closing high.

Within the networking sector, Alcatel-Lucent (ALU) and Harris (HRS) posted standout gains after reporting their quarterly results.

Biotechnology stocks also showed a strong move to the upside, driving the NYSE Arca Biotechnology Index up by 1.2 percent. Alexion (ALXN) helped lead the way higher after Bloomberg said the company has hired Goldman Sachs (GS) as an adviser as it prepares for a possible takeover offer from Roche.

Semiconductor, computer hardware, and software stocks also saw strength on the day, contributing to the notable advance by the tech-heavy Nasdaq.

Meanwhile, gold stocks came under pressure over the course of the session, moving lower along with the price of gold. With gold for December delivery sliding $4.80 to $1,324.80 an ounce, the NYSE Arca Gold Bugs Index fell by 1.2 percent.

Healthcare provider, airline, and health insurance stocks also saw some weakness, offsetting the strength in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index surged up by 1.5 percent, while Hong Kong's Hang Seng Index ended the day up by 0.5 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index rose by 0.5 percent, the German DAX Index and the U.K.'s FTSE 100 Index both edged up by 0.2 percent.

In the bond market, treasuries turned lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.8 basis points to 2.603 percent after hitting a low of 2.572 percent.

Looking Ahead

While the Fed statement is likely to be in the spotlight on Wednesday, reports on second quarter GDP, private sector employment, and Chicago-area business activity may attract some attention in the hours leading up to the announcement from the central bank.

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