Stocks Close Roughly Flat Following Choppy Trading Day - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout much of the trading day on Tuesday before ending the session roughly flat. Despite the lackluster performance on the day, the Dow still reached another new record closing high.

The major averages ended the day on opposite sides of the unchanged line. While the Dow crept up 13.51 points or 0.1 percent to 18,312.39, the Nasdaq dipped 8.41 points or 0.2 percent to 5,070.03 and the S&P 500 edged down 1.37 points or 0.1 percent to 2,127.83.

Uncertainty about the near-term outlook for the markets may have contributed to the choppy trading on Wall Street following the recent move to record highs.

Traders were also digesting a report from the Commerce Department showing a substantial increase in housing starts in the month of April.

The report said housing starts surged up 20.2 percent to an annual rate of 1.135 million in April from the revised March estimate of 944,000. Economists had expected housing starts to climb to a rate of 1.029 million.

With the bigger than expected increase, housing starts reached their highest level since hitting 1.197 million in November of 2007.

Building permits, an indicator of future housing demand, also jumped by 10.1 percent to an annual rate of 1.143 million in April.

Jennifer Lee, senior economist at BMO Capital, said, "U.S. second quarter growth may have been revised down recently but at least there will be upward support from residential construction."

While the report generated some optimism about the economy, the data also led to an increase in bond yields and renewed concerns about the outlook for interest rates.

Among individual stocks, shares of Urban Outfitters (URBN) moved sharply lower on the day after the apparel retailer reported weaker than expected first quarter results.

Retail giant Wal-Mart (WMT) also showed a notable move to the downside after reporting first quarter earnings and revenues that came in below analyst estimates.

Meanwhile, shares of Take-Two Interactive (TTWO) saw significant strength after the video game publisher reported better than expected fourth quarter earnings and increased its stock buyback program.

Sector News

While many of the major sectors ended the day showing only modest moves, substantial weakness was visible among gold stocks. Reflecting the weakness in the gold sector, the NYSE Arca Gold Bugs Index tumbled by 4.1 percent.

The steep losses by gold stocks came amid a sharp drop by the price of the precious metal, with gold for June delivery plunging $20.90 to $1,206.70 an ounce.

Oil service stocks also saw considerable weakness on the day, moving lower along with the price of crude oil. With crude for June delivery plummeting $2.13 to $57.30 a barrel, the Philadelphia Oil Service Index slumped by 2.9 percent.

Steel, natural gas, and telecom stocks also moved to the downside, although selling pressure remained relatively subdued.

On the other hand, banking stocks moved notably higher on the day, driving the Dow Jones Banks Index up by 1.2 percent. With the gain, the index reached its best closing level in well over six years.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.7 percent, while Australia's All Ordinaries Index fell by 0.7 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index climbed by 0.4 percent, the French CAC 40 Index and the German DAX Index jumped by 2.1 percent and 2.2 percent, respectively.

In the bond market, treasuries extended yesterday's pullback on the heels of the upbeat housing data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.4 basis points to 2.262 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to the minutes of the latest Federal Reserve meeting, which could shed some light on the outlook for interest rates.

On the earnings front, big-name retailers Lowe's (LOW), Staples (SPLS) and Target (TGT) are due to release their quarterly results before the start of trading on Wednesday.