Worries About Monetary Policy Outlook Weighing On Wall Street - U.S. Commentary

(RTTNews) - Stocks have moved moderately lower in early trading on Tuesday, partly offsetting the strength seen in the previous session. The major averages have all moved to the downside, although selling pressure has remained somewhat subdued.

In recent trading, the major averages have climbed well off their lows for the young session, but they remain stuck in the red. The Dow is down 47.30 points or 0.3 percent at 16,521.98, the Nasdaq is down 13.48 points or 0.3 percent at 4,370.41 and the S&P 500 is down 6.77 points or 0.4 percent at 1,932.22.

The early weakness on Wall Street partly reflects concerns about the outlook for monetary policy following the release of some upbeat U.S. economic data.

The Institute for Supply Management recently released a report showing that its non-manufacturing index climbed to 58.7 in July from 56.0 in June, with a reading above 50 indicating growth in the service sector. Economists had been expecting the index to edge up to a reading of 56.5.

With the bigger than expected increase, the ISM said the non-manufacturing index reached its highest reading since its inception in January of 2008.

A separate report from the Commerce Department showed that factory orders rebounded by more than expected in the month of June.

While the data points to an upbeat economic outlook, it also fuels speculation that the Federal Reserve may raise interest rates sooner than anticipated.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Encouragingly, the Q2 economic rebound after the Q1 contraction is continuing at a good pace in Q3."

"While of course something to root for, it again brings the policy of the Federal Reserve front and center and that is why good economic news is not translating into better stock market performance," he added.

Nonetheless, traders seem somewhat reluctant to make any significant moves, limiting the downside for the broader markets.

Most of the major sectors are showing only modest moves, although some weakness is visible among oil service, gold, and steel stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 1 percent, while Hong Kong's Hang Seng Index crept up by 0.2 percent.

Meanwhile, the major European markets are seeing modest strength on the day. While the U.K.'s FTSE 100 Index has inched up by 0.1 percent, the German DAX Index and the French CAC 40 Index are up by 0.2 percent and 0.3 percent, respectively.

In the bond market, treasuries have moved to the downside on the heels of the upbeat economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.7 basis points at 2.518 percent.