Stocks Close Slightly Higher Ahead Of BoJ, Fed Decisions - U.S. Commentary

(RTTNews) - Stocks managed to end Tuesday's trading modestly higher even traders looked ahead to two closely watched monetary policy decisions. The slim gains on the day offset the slight decline that was seen in the previous session.

The major averages ended the day just above the unchanged line. The Dow inched up 9.79 points or 0.1 percent to 18,129.96, the Nasdaq rose 6.33 points or 0.1 percent to 5,241.35, and the S&P 500 crept up 0.64 points or less than a tenth of a percent to 2,139.76.

Traders largely seemed reluctant to make significant moves ahead of monetary policy decisions by both the Bank of Japan and the U.S. Federal Reserve.

The Bank of Japan is expected to announce its latest policy decision overnight, with some analysts suggesting that the bank could cut interest rates further into negative territory.

Meanwhile, the Fed is scheduled to release its statement Wednesday afternoon and is widely expected to leave interest rates unchanged.

Traders are likely to keep a close eye on the wording of the Fed's statement for clues on the possibility of a rate hike later this year.

Early in the day, some buying interest was generated by disappointing housing data, which reinforced expectations that the Fed will refrain from raising rates.

The Commerce Department said housing starts tumbled by 5.8 percent to an annual rate of 1.142 million in August from the revised July estimate of 1.212 million.

Economists had expected housing starts to drop by 1.7 percent to a rate of 1.190 million from the 1.211 million that had been reported for the previous month.

The report also said building permits, an indicator of future housing demand, dipped by 0.4 percent to a rate of 1.139 million in August from a revised 1.144 million in July.

The decrease surprised economists, who had expected building permits to climb by 1.3 percent to a rate of 1.167 million in August from the 1.152 million originally reported for the previous month.

Sector News

While most of the major sectors ended the day showing only modest moves on the day, considerable strength was visible among biotechnology stocks. Reflecting the strength in the sector, the NYSE Arca Biotechnology Index surged up by 1.4 percent.

Intercept Pharmaceuticals (ICPT), Ionis Pharmaceuticals (IONS), and Agios Pharmaceuticals (AGIO) turned in some of the biotech sector's best performances.

On the other hand, electronic storage stocks came under pressure over the course of the trading day, dragging the NYSE Arca Disk Drive Index down by 1.3 percent.

Housing stocks also moved to the downside on the heels of the disappointing housing starts report. The Philadelphia Housing Sector Index slid by 1.2 percent to its lowest closing level in well over two months.

Homebuilder Lennar (LEN) led the housing sector lower despite reporting third quarter results that exceeded analyst estimates.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region showed only modest moves during trading on Tuesday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Australia's All Ordinaries Index crept up by 0.1 percent.

The major European markets also finished the day little changed. While the French CAC 40 Index edged down by 0.1 percent, the German DAX Index inched up by 0.2 percent and the U.K.'s FTSE 100 Index rose by 0.3 percent.

In the bond market, treasuries closed roughly flat for the third consecutive session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by less than a basis point to 1.688 percent.

Looking Ahead

Early trading on Wednesday may be impacted by reaction to the Bank of Japan's decision, although the Fed is likely to quickly move into the spotlight.